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Friday, September 18, 2009

Detroit Publishing Co. Sustainable transport 1905Alfred Vanderbilt's Belmont Park four-in-hand passing the Holland House Hotel on Fifth Avenue, in the days when "coaching" was a favored pastime of millionaire sportsmen

Ilargi: These days I can't seem to look at numbers anymore without asking myself what's behind them. Hey, who can? 90% of them are embellished crappahola, and we're still stuck trying to figure out what they mean if we want to know what lies ahead. Wouldn't a be nice to have a government that's transparent, and doesn't try to pull a fast one on you every chance it gets? Yeah, dream on; here goes another round of rnumber rumbling:

The headline may claim that "initial unemployment claims dip", but in reality they have hardly moved at all through summer. As for continuing claims numbers, they are not only up, they're increasingly devoid of meaning, as increasing numbers of people fall off the far end, beyond the duration of unemployment benefits. The worst hit states, where unemployment is highest, and hence tax revenues drop most, will have to pony up the most in additional benefits, as an estimated 1.5 million people will have exhausted all resources by Christmas. For some states, this must cause nightmares already. Especially since it won't stop in 2009; not even the most rose colored forecasters see a significant improvement in jobless numbers any time soon.

If you look at the speed at which benefits are running out right now, going from almost zero to 1.5 million "clients" in just a few months, we could see millions of long-time, structurally unemployed soon. A true underclass.

Also, the discrepancy between initial claims and official job loss numbers begins to look ridiculous. A slight difference is fine, but 300% is crazy. Then again, that label applies to most US government data.

Initial filings for insurance fall by 12,000 to 545,000, but continuing claims grow.

The number of Americans filing for first-time unemployment insurance fell last week, while ongoing claims jumped, the government said Thursday. There were 545,000 initial jobless claims filed in the week ended Sept. 12, down 12,000 from a revised 557,000 the previous week, the Labor Department said in a weekly report. A consensus estimate of economists surveyed by Briefing.com expected 557,000 new claims. The 4-week moving average of initial claims was 563,000, down 8,750 from the previous week's revised average of 571,750.

[..] The government said 6,230,000 people filed continuing claims in the week ended Sept. 5, the most recent data available. That's up 129,000 from the preceding week's revised 6,101,000 claims.

Single family home starts are down, and apartments are up. The latter is a sector that sank so deep, it can easily go up 25% and still be a meaningless stat. What I find more interesting is that while mortgage rates are exceedingly low, mortgage applications are sinking. The amount of money the federal government pumps into housing through all the channels it has opened, from tax credits for buyers to loan purchases by Fannie, Freddie and now Ginnie Mae, still can't truly lift the market, no matter that the stock markets are up 50% or more.

If Washington indeed lets the $8000 credit program expire, where will these numbers go? Wouldn't it be better to leave Bulgaria behind for a while and let the marketplace determine prices for a change? Yes, prices would collapse, but isn't that the very obvious best thing that could happen for those who want to buy a home? Spending all those trillions just to keep up appearances a little longer, it's really the worst possible way to spend public money.

If you look at the existing housing inventory and you add the millions of homes that are being kept off the market, as well as the estimated 2 million additional foreclosures this year, home prices can only possibly have one way to go: down down deeper and down. By tempting people to buy, with tax credits, and banks to lend, with loan guarantees, the Obama government holds up prices at artificially elevated levels for what, another few months, and thereby fails the interests of its voters in a spectacular fashion.

Housing starts rose modestly as apartment construction rebounded and offset the first decline in single-family home starts after five straight increases, underscoring the fragility of the economic recovery. Separately, the number of U.S. workers filing new claims for jobless benefits unexpectedly declined, according to a Labor Department report Thursday. Meanwhile, total claims lasting more than one week increased.

Housing starts climbed a less-than-expected 1.5% to a seasonally adjusted 598,000 annual rate compared to the prior month, the Commerce Department said Thursday. Building permits also increased last month. Single-family starts in August compared to the prior month retreated 3.0% to 479,000, a modest pullback after five straight increases that accumulated with the steady rise in new-home sales. As for the beleaguered apartment market, construction of housing with two or more units jumped 25.3% to 119,000. Within that multi-family category, groundbreakings of homes with five or more units were 35.3% higher on the month -- and down 48.2% on the year.

Mortgage rates for 30-year fixed U.S. home loans fell to the lowest since May amid signs the housing market may be stabilizing and the recession is over. The average 30-year rate dropped to 5.04 percent from 5.07 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. That’s the lowest since the week ended May 28, when the rate was 4.91 percent. The 15-year rate fell to 4.47 percent from 4.5 percent. Falling home prices and a government tax credit for first- time buyers are bolstering demand for housing. [..] Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month in August [..]

The volume of mortgage applications filed last week fell a seasonally adjusted 8.6% compared with the week before, the result of a drop in both applications to refinance an existing loan as well as those to purchase a home [..] Refinance applications made up a 61% share of all activity [..]

Meanwhile, credit, just about wherever you look, keeps on dropping, no matter how governments try to battle the trend with, again and of course, taxpayer money. It's not called a credit crunch for nothing, and that crunch is nowhere near over. Ironically, it can only run its natural course once the government gets out of the way.

It's the old "you can lead a horse to water" paradigm. For the economy to recover, banks will need to lend and consumers will need to borrow, but neither of them wants to play these respective parts. The risks are too high, the debts are too high, and the prospects, provided you are willing to look beyond government involvement, are too bleak.

[..] global corporate debt issuance excluding government entities and financials, jumped to $903 billion in the first half, compared with $361 billion in the last six months of 2008, and the number of issues surged by 62 per cent. Corporate year-to-date issuance is already 22 per cent above 2008 volumes and exceeds the 2007 record by over $150 billion. Yet bank lending remains severely depressed [..]

Global syndicated bank lending fell 17 per cent in the first half of 2009 compared with the previous six months and currently stands at 44 per cent of 2008 volumes, down 65 per cent from the 2006 peak.

U.S. Treasury data showed a sharp net capital outflow from the United States in July. The net capital outflow from the U.S. increased to $97.5 billion in July from a revised outflow of $56.8 billion in June (TICS Report) report.[..] June data had originally reported an outflow of $31.2 billion.

Finally, our friend VK leafed through the Fed Flow of Funds report yesterday and came up with the following bits.

Rest of world is dumping at a slower rate as they probably have disposed of most of their holdings while FED pumped in +1088.1 billion in Q2 vs +1069.3 billion in Q1. That's your dollars at work propping up failed financial institutions.

The shocking thing is that, even with all the FED support Net Issues of GSE paper declined for the First Time coming in at $118.5 billion in Q2 vs +$37 billion in Q1.

Whitney Tilson of T2 Partners is sticking to his guns on housing: The uptick in recent months is a seasonal mix issue. When the market finally sees this, Whitney says, banks and homebuilders will tank. (We'd go farther. If Whitney's right about housing, which we still think he is, the MARKET will tank). Here's Whitney on Fast Money last night:

Initial filings for insurance fall by 12,000 to 545,000, but continuing claims grow.

The number of Americans filing for first-time unemployment insurance fell last week, while ongoing claims jumped, the government said Thursday. There were 545,000 initial jobless claims filed in the week ended Sept. 12, down 12,000 from a revised 557,000 the previous week, the Labor Department said in a weekly report. A consensus estimate of economists surveyed by Briefing.com expected 557,000 new claims. The 4-week moving average of initial claims was 563,000, down 8,750 from the previous week's revised average of 571,750.

"This looks good with claims down by 31,000 over the past four weeks, but the late Labor Day could well have distorted the latest data," wrote economist Ian Shepherdson of High Frequency Economics in a research note. "We need to see what happens over the next couple of weeks before we can be sure whether a downward trend is really in place," Shepherdson said.

Continuing claims: The government said 6,230,000 people filed continuing claims in the week ended Sept. 5, the most recent data available. That's up 129,000 from the preceding week's revised 6,101,000 claims. The 4-week moving average for ongoing claims fell by 5,500 to 6,180,250, down from the prior week's revised average of 6,185,750.

The initial claims number identifies those filing for their first week of unemployment benefits. Continuing claims reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those who have moved to state or federal extensions, nor people whose benefits have expired.

State-by-state data: A total of three states reported a decline in initial claims of more than 1,000 for the week ended Sept. 5, the most recent data available. Claims in California fell the most, by 2,751, which a state-supplied comment said was due to fewer layoffs in the trade and services industries. Six states said that claims increased by more than 1,000. Washington reported the most new claims at 2,620, which a state-supplied comment said was due to layoffs in the construction, service, public administration and manufacturing industries.

Outlook. Shepherdson said claims should continue to fall in the coming weeks as the economy expands and the pace of layoffs slows to reconcile with current GDP growth. "Companies are profoundly skeptical about the sustainability of the upturn, but unless they believe the economy is about to suffer a serious broad relapse, we think they will have to reduce the rate of job losses," Shepherdson said.

Housing starts rose modestly as apartment construction rebounded and offset the first decline in single-family home starts after five straight increases, underscoring the fragility of the economic recovery. Separately, the number of U.S. workers filing new claims for jobless benefits unexpectedly declined, according to a Labor Department report Thursday. Meanwhile, total claims lasting more than one week increased.

Housing starts climbed a less-than-expected 1.5% to a seasonally adjusted 598,000 annual rate compared to the prior month, the Commerce Department said Thursday. Building permits also increased last month. Single-family starts in August compared to the prior month retreated 3.0% to 479,000, a modest pullback after five straight increases that accumulated with the steady rise in new-home sales. As for the beleaguered apartment market, construction of housing with two or more units jumped 25.3% to 119,000. Within that multi-family category, groundbreakings of homes with five or more units were 35.3% higher on the month -- and down 48.2% on the year.

U.S. builders are feeling more confident, a new report this week indicated. The National Association of Home Builders on Wednesday said its housing market index rose 1 point to 19 in September. The gauge measures builder confidence of sales prospects for new, single-family homes. At 19, the index is at its highest level since May 2008. But it takes a reading above 50 to indicate more builders view sales conditions positively than see them negatively. Within the NAHB report, a gauge of sales expectations for the coming six months slipped downward, by 1 point to 29, as builder fret about the November expiration of an $8,000 tax credit for first-time home buyers.

The latest data showed new-home sales climbed more than anticipated in July, staging their fourth straight month of strong gains. Inventories plunged. While unemployment is rising, to 9.7% at last count in August, the prices of new homes have fallen sharply, with the median sliding by 11.5% since July 2008. "The real reason home sales are picking up is that home prices have collapsed," said Mike Larson, a Weiss Research analyst reacting favorably to the NAHB index. "That collapse has made housing affordable once again in many markets."

The 1.5% increase in August housing starts came short of expectations. Economists surveyed by Dow Jones Newswires forecast a 3.3% increase to an annual rate of 600,000. July housing starts fell by 0.2% to 589,000, revised from an originally reported 1.0% decrease to 581,000. Starts rose 7.1% during June and 15.0% in May. Year over year, housing starts were 29.6% lower than the pace of construction in August 2008.

Building permits in August climbed 2.7% to a 579,000 annual rate. Economists had expected permits to rise by 4.6% to a rate of 590,000. July permits fell 1.1% to 564,000. Regionally, housing starts rose 23.8% in the Northeast and 0.9% in the Midwest. Sales fell 2.4% in the South and were flat out West. Nationwide, an estimated 55,100 houses were actually started in August, based on figures not seasonally adjusted. An estimated 52,300 building permits were issued last month, also based on unadjusted figures.

Mortgage rates for 30-year fixed U.S. home loans fell to the lowest since May amid signs the housing market may be stabilizing and the recession is over. The average 30-year rate dropped to 5.04 percent from 5.07 percent, mortgage buyer Freddie Mac of McLean, Virginia, said today in a statement. That’s the lowest since the week ended May 28, when the rate was 4.91 percent. The 15-year rate fell to 4.47 percent from 4.5 percent.

Falling home prices and a government tax credit for first- time buyers are bolstering demand for housing. A return to economic growth may also help the property market. Federal Reserve Chairman Ben Bernanke said this week that the worst U.S. recession since the 1930s has probably ended, yet growth may not be strong enough to quickly cut the unemployment rate. “The Fed’s telling us that rates are going to be low for an extended period so that’s benefiting potential homeowners who are entering the mortgage market,” said Donald Rissmiller, chief economist at Strategas Research Partners in New York. “I don’t think that policy makers want to make the mistakes of past episodes where stimulus was withdrawn too early.”

The Federal Reserve set out last year to encourage lower mortgage rates by pledging to buy bonds backed by home loans. It increased the size of the program to $1.25 trillion in March. The bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae brought down yields on mortgage-backed securities and allowed lenders to reduce rates on new loans while still selling the securities backed by them at a profit. The plan helped drive mortgage rates to a record low of 4.78 percent twice in April.

The Mortgage Bankers Association’s index of applications to purchase a home or refinance declined 8.6 percent in the week ended Sept. 11. The group’s refinancing gauge fell 7.4 percent, while the index of purchases declined 10 percent. Single-family home starts dropped 3 percent in August, the first decrease since January, while work began on 25 percent more multifamily units such as apartments, figures from the Commerce Department showed today. The decline in single-family starts may signal reluctance on the part of builders to start new homes as the government’s tax credit for first time buyers is set to expire later this year.

Rising foreclosures and falling home prices remain impediments to a full housing recovery. Foreclosure filings in the U.S. exceeded 300,000 for the sixth straight month in August as job losses left many homeowners unable to keep up with their mortgage payments, property data service RealtyTrac Inc. of Irvine, California, said last week. U.S. home prices may fall another 10.5 percent and reach bottom at the end of next year’s second quarter, according to a report from Deutsche Bank AG. The total decline will be 38 percent measured from the estimated market peak in the fourth quarter of 2005, New York-based analysts led by Karen Weaver said in the report Sept. 14. The forecast covers 100 metropolitan areas.

The volume of mortgage applications filed last week fell a seasonally adjusted 8.6% compared with the week before, the result of a drop in both applications to refinance an existing loan as well as those to purchase a home, the Mortgage Bankers Association reported Wednesday. The average rate on 30-year fixed-rate mortgages rose for the week ended Sept. 11, while rates on 15-year fixed-rate mortgages and one-year adjustable-rate mortgages fell, according to the MBA's weekly survey, which covers about half of all U.S. retail residential mortgage applications. Results were adjusted for the Labor Day holiday.

The drop in applications follows a 17% week-over-week jump recorded the week of Sept. 4. Refinance applications fell 7.4% last week, compared with the week before; applications for mortgages to purchase a home were down a seasonally adjusted 10.3% last week, compared with the previous week, the MBA said. The four-week moving average for all mortgages was up 2.9%. Applications were down 18.7%, compared with the same week in 2008.

Refinance applications made up a 61% share of all activity, up from 59.8% the previous week. ARMs made up 6% of all application activity, up from 5.8% the previous week.According to the survey, the 30-year fixed-rate mortgage averaged 5.08% last week, up from 5.02% the previous week. Fifteen-year fixed-rate mortgages averaged 4.41% last week, down from 4.45% the previous week. And one-year ARMs averaged 6.61%, down from 6.69% the previous week.

To obtain the rates, the 30-year fixed-rate mortgage required payment of an average 0.98 point, the 15-year fixed-rate mortgage required payment of an average 1.12 points, and the one-year ARM required payment of an average 0.20 point. A point is 1% of the mortgage amount, charged as prepaid interest.

The federal government and states are girding themselves for the next foreclosure crisis in the country's housing downturn: payment option adjustable rate mortgages that are beginning to reset. "Payment option ARMs are about to explode," Iowa Attorney General Tom Miller said after a Thursday meeting with members of President Barack Obama's administration to discuss ways to combat mortgage scams. "That's the next round of potential foreclosures in our country," he said.

Option-ARMs are now considered among the riskiest offered during the recent housing boom and have left many borrowers owing more than their homes are worth. These "underwater" mortgages have been a driving force behind rising defaults and mounting foreclosures. In Arizona, 128,000 of those mortgages will reset over the the next year and many have started to adjust this month, the state's attorney general, Terry Goddard, told Reuters after the meeting. "It's the other shoe," he said. "I can't say it's waiting to drop. It's dropping now."

The mortgages differ from other ARMs by offering an option to pay only the interest each month or a low minimum payment that leads to a rising balance in the loan's principal. When the balance of the loan reaches a certain level or the mortgage hits a specific date, the borrower must begin making full payments to cover the new amount. The loan's interest rate also may have been fixed at a low level for the first few years with a so-called teaser rate, but then reset to a higher level.

Because the new monthly payments can be five or 10 times what borrowers are accustomed to paying, they "threaten a much greater hit to the consumer than the subprimes," Goddard said, referring to the mortgages often extended to less credit-worthy borrowers that fed the first wave of the financial crisis.

Miller said option-ARMs were discussed at Tuesday's meeting on mortgage scams, which brought state attorneys general from across the country together with U.S. Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Housing and Urban Development Secretary Shaun Donovan, and Federal Trade Commission Chairman Jon Leibowitz.

The mortgages tend to be "jumbo," or for significantly large amounts, Goddard said, making it even harder for borrowers to sidestep foreclosure. He said he expected to see an increase in scams as distressed homeowners become more desperate to refinance big debts. Goddard said his office is investigating hundreds of cases where companies have made fraudulent promises, and charged large fees, to mortgage defaulters.

The U.S. housing market has suffered the worst downturn since the Great Depression, and its impact has rippled through the recession-hit economy. Some signs of stabilization emerged recently, with sales rising and home price declines moderating in many regions of the country. Home prices in some regions have risen. However, many economists say there is still a huge supply of unsold homes lingering on the market and that, coupled with a frenzy of more foreclosures ahead, should depress home prices for the rest of 2009.

Real estate data firm RealtyTrac, in its August 2009 U.S. Foreclosure Market Report, said foreclosure filings -- default notices, scheduled auctions and bank repossessions -- were reported on 358,471 U.S. properties during the month, a decrease of less than 1 percent from the previous month, but an increase of nearly 18 percent from the same month a year ago. The report said one in every 357 U.S. housing units received a foreclosure filing last month.

A flurry of M&A news and corporate issuance on the first anniversary of Lehman Brothers’ bankruptcy has strengthened optimism about credit quality in the capital markets, infusing energy into the equity and corporate bond rallies. With the MSCI World equities index gaining more than 60 per cent since March and corporate bond and structured credit risk spreads narrowing by a similarly impressive margin, this begs the question: can the capital markets recovery of 2009 end the liquidity crisis in the real economy?

Capital markets perform a unique function in the global financial liquidity network by aligning borrowers’ needs with those of risk-taking savers, in effect sidelining institutional lender constraints such as capital restrictions and risk-averse bank shareholders and depositors. During this banking crisis, capital markets have become the main channel of monetary transmission in the economy. Hence it is not surprising that the improvement in international producer sentiment this year has followed the post-Lehman thaw in capital markets activity, even as the monetary statistics show a continued slowdown in bank lending across industrialised economies.

According to Thomson Reuters, global corporate debt issuance excluding government entities and financials, jumped to $903bn in the first half, compared with $361bn in the last six months of 2008, and the number of issues surged by 62 per cent. Corporate year-to-date issuance is already 22 per cent above 2008 volumes and exceeds the 2007 record by over $150bn. Yet bank lending remains severely depressed as the effects of loan losses and changing regulatory and accounting practices focus traditional lenders’ efforts on shedding balance sheet risk.

Global syndicated bank lending fell 17 per cent in the first half of 2009 compared with the previous six months and currently stands at 44 per cent of 2008 volumes, down 65 per cent from the 2006 peak. In effect, this year’s economic stabilisation has been based on financial disintermediation. Broken bank credit channels and unprecedented monetary liquidity in the global financial system have allowed corporate borrowers to bypass traditional lenders and raise funds directly from capital markets.

The problem is that the economic benefits of stabilising financial conditions and recovering wholesale market liquidity are being distributed unevenly. Governments, financial institutions and large investment grade companies have attracted the bulk of finance from risk-conscious investors. The handful of new sub-investment grade issues launched this year trade at a high penalty risk premium compared with high-grade borrowers. The margin of European high-yield corporate asset swap spreads over A-rated investment grade issuers is about 500 basis points.

This is down from almost 800 bps in January but is far from a sign of normal financing conditions in the real economy. It is a tax on corporate profits, investment and employment. Meanwhile, illiquid securitisation markets make borrowing harder for smaller borrowers who now rely predominantly on disrupted bank credit.

To the extent that securitisation brought savers and borrowers together beyond the borders of national banking systems, illiquid global Asset Backed and Mortgage Backed Security markets epitomise the ongoing crisis of global finance. Securitisation issuance remains depressed, down 50 per cent over 2008 volume, despite support from the Fed’s Term Asset-Backed Securities Loan Facility (Talf) and the ECB’s covered bond purchase programme.

In a normal economic cycle, a flood of capital market liquidity would fuel a recovery. However, there is nothing normal about this cycle as major channels of finance in the real economy remain blocked. Increased corporate issuance and rallying equities may raise the amplitude of the inventory cycle, stabilise consumer wealth and slow job losses. But without policy measures to restore normal credit creation the pressure of leverage on company and consumer balance sheets will keep spending below depressed income evels. As international markets price in the beginning of Fed, ECB and Bank of England exit strategies next year and China moves to restrict loan growth, this hardly bodes well for global growth.

The capital markets recovery of 2009 has reduced the need for emergency levels of public support in the financial system but it has not reduced the need to improve the economic effectiveness of liquidity. Rebuilding the liquidity arteries in the real economy remains a pre-condition for ending this crisis and ensuring a healthy and sustainable recovery into 2010. Without credit, global markets awash with liquidity will start looking bubbly. And an anaemic recovery coming through the floods of international central bank cash will morph into a liquidity trap. Japan is the country that comes to mind.

Talking to an old friend about the US economic “recovery,” we see no profit growth from extremely discounted levels, no revenue growth, and no employment growth. We see more than 100% of GDP growth as completely dependent on government(s) spending. The Federal Housing Administration has issued more than a trillion dollars in mortgages this year, picking up where Fannie Mae and Freddie Mac left off (they really haven’t stopped either). Delinquency rates are approaching 17%.

Real GDP may be positive for the quarter, but when the government is involved there are lots of shenanigans. For example, we've heard it plans to deduct the cash rebate for cars from the sales price, thus lowering the GDP deflator and artificially raising the reported real GDP number.

Senseless.

It’s all a game of perception. An economy is a physical system, and in the long run it will react as such.

Recent history has seen economic growth stimulated by government(s) artificially lowering interest rates to get the consumer to borrow, which leads to companies building inventory, which leads to hiring, which leads to economic expansion. This time around, the consumer is so levered that will not happen. The Fed itself has worried about this in papers as the “zero bound interest rate problem.”

This is a balance sheet contraction, a credit bust. You even hear the government saying it'll take years to recover. It'll take years for the consumer to delever (unwillingly). I think most stock buyers know this, but aren't buying stocks because they think the economy will recover and profits will too. I think a lot of people are buying stocks to 1. catch up with other buyers, and 2. because they're worried about “inflation".

I've written in detail why inflation (credit expansion) is unlikely: The fractional banking system is still broken, and so is the consumer. Without either or both, every dollar the Federal Reserve attempts to print just replaces a dollar destroyed by bad debt. I estimate another $10 trillion to $20 trillion in debt/derivatives is still bad. The government is resurrecting PPIP to try to make that debt look better.

But again, an economy is a physical system. When the market realizes that the Fed can't create inflation (a full monetization of the majority of debt; something that would make even Ben blink), it'll see that the S&P 500 is really trading at 20 times earnings that are not growing. It'll realize that all we've done is actually increase the overall debt in the system with massive stimulus and spending. It'll see the risk in stocks as extremely high.

Following on the topic of currencies, the Treasury Dept. has just announced the TIC outflow for July, and they are terrible (as in terrible for the USD).

U.S. Treasury data showed a sharp net capital outflow from the United States in July. The net capital outflow from the U.S. increased to $97.5 billion in July from a revised outflow of $56.8 billion in June (TICS Report) report.

Also, June data had originally reported an outflow of $31.2 billion.

This means money is not coming into the U.S, likely seen as too risky by foreign investors. BNN reported that these moves are not by major central banks, but by smaller institutions or individuals.

[On Tuesday] morning, Morning Joe's Joe Scarborough and Mika Brzezinski were joined by Fortune Magazine Managing Editor Andrew Serwer and our own co-founder/editor-in-chief Arianna Huffington in Carlsbad, California at the Fortune Magazine Most Powerful Women Summit to talk about how Wall Street has fared in the age of bailouts. Asked about Goldman Sachs and their post-TARP fortunes, Serwer used a pretty telling metaphor:SERWER: I mean, it's amazing to me that as we recover, you know, come out of this financial crisis, you know, you'd expect a company like Goldman Sachs maybe things are improving, make a little money. But they have a record quarter. In other words, they made more money in this three month period than they ever had in any other--

SCARBOROUGH: [archly] But they just made some good guesses, right?

SERWER: Well, I don't know if it's okay or not, but I think what happened is that the government has telegraphed to Wall Street, not only Goldman Sachs but the other firms what it was doing, what was going on, what the program was, and so, essentially, it's like telling a Goldman Sachs, "Hey, put your money on 32 Black" at the casino, at the roulette wheel. And the thing spins and lo and behold, where does it end up, Joe?

SCARBOROUGH: 32 Black?

SERWER: 32 Black.

That's a pretty significant statement from the Managing Editor of a magazine that's going to have Goldman CEO Lloyd Blankfein present the "Goldman Sachs & Fortune Global Women Leaders Award" at this very Summit. And it's hard to ignore the fact what Serwer describes is a risk-free system of wealth accumulation that bears no real working resemblance to the thing we know as "capitalism." Remember back to the 2008 campaign, when so many people worried about "wealth redistribution?" Turns out the worry was very real, but the worriers themselves are all making out pretty well!

A year after the bankruptcy of Lehman Brothers Holdings Inc., credit-default swaps have lost their stigma for disaster and are contributing to the growing confidence in the credit markets. The cost to protect against a failure by New York-based Goldman Sachs Group Inc., Charlotte, North Carolina-based Bank of America Corp., and 12 of the other biggest derivatives dealers dropped 66 percent in the past six months, according to an index of swaps compiled by Credit Derivatives Research LLC. While the U.S. struggles with the slowest recovery since 1945, the market where investors protect themselves from default and speculate on corporate debt shows confidence is the highest since June 2008.

Credit-default swaps worsened the biggest financial crisis since the 1930s as the meltdown of Lehman and American International Group Inc., two of the largest traders, caused a seizure in lending. Now, Wall Street is accelerating reforms Treasury Secretary Timothy Geithner started in 2005 when he was president of the New York Federal Reserve to increase transparency in a market lawmakers plan to regulate.

“A functioning credit-default swaps market contributes to more efficient extension of credit” by giving investors and lenders confidence that the industry won’t implode, said Alexander Yavorsky, a senior analyst at Moody’s Investors Service in New York. The consequences of Lehman’s failure “were astronomical, broadly speaking, but the CDS market worked well,” he said. Credit-default swaps pay the buyer face value in exchange for the underlying bonds or the cash equivalent should a company fail to meet its debt obligations. Prices rise when perceptions of creditworthiness deteriorate and fall when they improve.

Banks have had unparalleled access to money after Federal Reserve Chairman Ben S. Bernanke reduced the target rate for overnight loans between banks to a range of zero to 0.25 percent, from 5.25 percent in 2007. The Fed and the government spent, lent or committed $12.8 trillion to revive the economy. One result is that expectations another big financial institution will fail have receded. Credit Derivatives Research’s Counterparty Risk Index, which measures default swaps on 14 firms, has dropped to 104 basis points, after peaking on March 9 at a record 305.6 basis points, or 3.056 percentage points. That means it costs an average of $104,000 a year for a credit-default swap protecting $10 million of debt.

The Libor-OIS spread, a gauge of banks’ reluctance to lend, contracted to 0.11 percentage point yesterday from a peak of 3.64 percentage points in October. Former Fed Chairman Alan Greenspan said in June 2008 he would consider credit markets back to “normal” if the spread was 0.25 percentage point. In addition to supporting banks by lowering rates and providing financing for troubled loans, Bernanke has succeeded in this year’s goal of reducing the cost of credit for consumers. Companies have issued a record $2.6 trillion of debt this year in dollars, euros, pounds and yen, the fastest pace on record and up 21 percent from 2008, according to data compiled by Bloomberg.

The gap between borrowing costs for investment-grade rated U.S. corporations and the government narrowed to 242 basis points on Sept. 11, the slimmest margin since February 2008 and down from a record 656 basis points on Dec. 5, Merrill Lynch & Co. indexes show. The decline means a company would save $41 million in annual interest on $1 billion of bonds sold. Rates on 30-year mortgages average 1.82 percentage points more than 10-year Treasuries, down from 3.27 percentage points in December, according to North Palm Beach, Florida-based Bankrate.com.

Credit markets seized up after New York-based Lehman, then the fourth-largest U.S. securities firm, filed for bankruptcy protection on Sept. 15, 2008, and the government bailed out New York-based insurer AIG with an $85 billion investment a day later. That amount ballooned to $182.5 billion. AIG needed to be rescued after handing over more than $18 billion in collateral tied to credit swaps sold to banks including Goldman Sachs and Societe Generale SA. The insurer had sold about $400 billion of swaps protecting against losses on securities backed by U.S. subprime mortgages and corporate loans.

The downfall of Lehman, which was founded in 1850, and AIG, at one point the world’s biggest insurer, raised concerns that no financial institution was safe. Markets for short-term credit locked up. The benchmark rate banks charged each other for three-month dollar loans, the London interbank offered rate, almost doubled in a month to 4.82 percent, British Bankers’ Association data show. The Dow Jones Industrial Average fell 43 percent over the next six months to the lowest level in six years.

New York Attorney General Andrew Cuomo began investigating whether credit-default swaps were manipulated to spread rumors about financial companies and drive down stock prices, a person in his office who asked not to be identified by name said at the time. President Barack Obama said in a June 17 speech on his plans for finance industry regulatory reform that credit swaps and other derivatives “have threatened the entire financial system.”

U.S. Congresswoman Maxine Waters, a California Democrat, introduced a bill in July that tried to ban credit-default swaps because she said they permitted speculation responsible for bringing the financial system to its knees. Wall Street responded to rising criticism in late 2008 by bringing more order to the market, which was developed more than a decade ago by traders at New York-based JPMorgan Chase & Co. as a way for banks to hedge against losses on corporate loans.

Contracts outstanding exploded from less than $632 billion in the first half of 2001 to as much as $62 trillion at the end of 2007, almost 10 times the amount of U.S. government debt outstanding, according to surveys by the International Swaps and Derivatives Association, a trade group based in New York. The market grew so fast that dealers couldn’t keep up with the administrative details. Former Fed Chairman Alan Greenspan said in 2006 that trades often were recorded on scraps of paper.

Banks want to show regulators the market doesn’t need fixing from outsiders. Canceling redundant trades cut the overall notional amount of credit-swap contracts almost in half to $32 trillion as of last week, according to data compiled by New York-based Depository Trust & Clearing Corp. This year more than 2,100 institutions agreed to standard terms to make the privately negotiated contracts easier to trade. For the first time they’re being processed through a clearinghouse, reducing the chance that one party will fail to make payments. About $2.5 trillion of swaps have been cleared since March. None of the almost 50 auctions that have been held to settle swaps tied to borrowers who defaulted over the past year have failed.

“The only market that I know of that seems to have worked virtually every day has been the CDS market,” Eraj Shirvani, chairman of ISDA and Credit Suisse Group AG’s head of fixed income for Europe, the Middle East and Africa, told reporters yesterday at the industry group’s regional meeting in New York. George Soros says the market is still unsafe. The 79-year- old billionaire investor said in an interview that credit- default swaps are “toxic” and “a very dangerous derivative” because it’s easier and potentially more profitable for investors to bet against companies using them than through so- called short sales.

The market “held up because it was effectively put on artificial life support” by government bailouts, said Soros, chairman of New York-based hedge fund Soros Fund Management, which has $24 billion under management. “It is a toxic instrument, and if people want to forget it, I think they’ll regret it.” Lawmakers from Washington to Brussels are considering regulations to oversee the market. In the U.S., the Justice Department said it’s examining potentially anticompetitive practices related to clearing, trading and information services.

“We believe there are massive risks that have gone undetected by both market participants and regulators,” said U.S. Treasury spokesman Andrew Williams. “That’s why we’re working with Congress to bring greater transparency and regulation to these markets.” The Obama administration sent Congress proposed legislation last month that would require the most active contracts in the $592 trillion over-the-counter derivatives market to be backed by clearinghouses and traded either on an exchange or on regulated systems.

Derivatives are contracts whose values are tied to assets including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather. Unlike exchanges, the business is unregulated and prices aren’t public. Dealers and investors in the U.S. agreed in April to buy and sell swaps for fixed annual premiums and an upfront exchange of cash that fluctuates with market values, similar to how bonds trade in an effort to make the market more uniform. Europe followed in July.

U.S. premiums are set at either 100 basis points or 500 basis points, meaning buyers pay an upfront fee and $100,000 or $500,000 annually to protect $10 million of bonds from default for five years. Previously, no upfront payments were required on contracts trading below 800 basis points, and the annual payment was set based on current market values.

The industry also created a committee of banks and investors that determines when contracts must be settled, rather than leaving the decisions open to dispute among traders. The swaps now are automatically resolved at auction when the committee rules a default or bankruptcy has occurred. At Geithner’s urging, dealers no longer reassign counterparties on a trade without the written consent of all parties in the contract. Banks also cut the amount of time it takes to confirm trades to less than a day, from about 17 days in 2005, according to data compiled by London-based Markit Group Ltd. and the Fed.

“The healing and transformation of derivatives started back with Geithner and the Fed trying to change the way derivatives were traded before the crisis hit,” René Canezin, head of global high-yield trading at Barclays Capital in New York, said. Although trading is now dominated by a smaller number of dealers, according to a Fitch Ratings survey last month, the reduction of contracts outstanding and the move toward clearing has lowered the risk of default by any one bank.

“It’s kind of like blood pressure medicine,” said Athanassios Diplas, global head of counterparty portfolio management in New York at Frankfurt-based Deutsche Bank AG. “You lowered the pressure so the body could function. Even though they represented net-zero economic risk, it did represent a lot of counterparty risk.” Two weeks after introducing her bill, Waters said she would be open to other ideas to keep the market going while cracking down on abuses. Waters didn’t return calls for comment.

Fed officials now say that for all the concern about the fallout from Lehman’s bankruptcy, the effect on the business of the derivatives market was negligible. Unwinding derivatives trades including credit-default swaps that Lehman held “was operationally complex, but it wasn’t a systemic problem,” said Theo Lubke, the senior vice president of the New York Fed who is responsible for the central bank’s efforts to curb risks in the OTC market.

“The industry is starting to feel the future is not looking as bleak as it was in terms of what regulations would be imposed,” said Jeremy Jennings-Mares, a partner in the capital markets group at Morrison & Foerster LLP in London. “There was a concern that regulation would not be well suited to the market and its proper functioning. Recent news has helped assuage those concerns somewhat.”

Regulators of some of the biggest bond buyers in the world are considering cutting credit-ratings firms' role in the market in response to botched ratings of complicated mortgage securities. Ratings firms including Standard & Poor's and Moody's Investors Service are facing fresh dissent from state insurance regulators, who are considering moving away from the firms ratings' as a way of measuring the health of insurer portfolios of mortgage-backed bonds.

The firms originally assigned high ratings to the securities in the middle of the decade, but they were found to be far less stable when housing prices began declining in 2007. The move is a notable challenge to a ratings system that has long embedded itself in the markets. Insurers are among the most important users of bond ratings, collectively holding some $3 trillion in rated bonds in their portfolios.

The regulators' moves are at a preliminary stage, but could change how state regulators gauge the quality of the investments backing insurers' policies. Currently they use the major ratings firms recognized by the Securities and Exchange Commission. Insurance regulators are considering whether to substitute analysis from other financial firms with expertise in valuing the securities, officials say. The effects of such a change could trickle throughout the world of bond investing, given insurers' outsize role in the bond markets.

"We just need to take stock of this reliance on a system that allows that kind of shock," in the form of swift and severe downgrades, "and frankly evaluate if there are other alternatives," said New York Insurance Department Deputy Superintendent Hampton Finer in an interview. Amid criticism of ratings agencies, he added, "we're under quite a bit of pressure to respond." Representatives from S&P, a unit of McGraw-Hill Cos., and Fimalac SA's Fitch Ratings declined to comment on the insurance regulators' plans. Moody's, a unit of Moody's Corp., declined to comment on the plans as well.

The National Association of Insurance Commissioners is scheduled to hold hearings on the matter next week in National Harbor, Md. The challenge from insurance regulators reflects the relentless criticism directed at ratings firms since the credit crisis began in 2007. The firms have been criticized as being too conflicted or too slow to recognize the risks in billions of bonds they rated as relatively safe. Just this month, the ratings agencies suffered a setback in one part of a civil lawsuit, in which a U.S. District Court rejected some raters' argument that ratings were protected from lawsuits by the First Amendment.

Moody's, which is the largest public company devoted mainly to ratings, also has had one of its largest shareholders, Warren Buffett's Berkshire Hathaway Inc., sell down his ownership stake. And various congressional bills have been proposed that could further dent the companies' long-held monopoly on ratings.

Insurers have a lot riding on the outcome of the debate. Life insurers are big owners of mortgage-backed securities, which represent about 8.5% of insurers' portfolios, according to A.M. Best Co. U.S. life insurers had to ante up a total of $2 billion in capital in 2008 to back up residential mortgage-backed securities to satisfy regulators seeking assurance companies have enough money to pay claims, the American Council of Life Insurers said. As of June 30, the insurers were facing a year-end bill of $11 billion to back up such securities, the trade group said.

Under the current capital guidelines insurers use nationally, the lower the ratings on bonds owned by insurers, the more capital they generally have to set aside to satisfy regulators.Separate from this hearing on the ratings firms, another group of commissioners is addressing the possibility of regulatory changes that would ease the burden of coming up with capital to meet existing capital guidelines, insurance executives said.

Regulators say they have no plans now to move away from the leading agencies for corporate and other bonds considered less-difficult to rate. The regulators' action could subject them to criticism from consumer-advocacy groups that they are bending over backward to help insurers look good on paper, at the possible expense of policy holders. Mr. Finer said regulators aim to move cautiously.

Regulators want to "formulate a thoughtful approach that first and foremost assures consumer protection," said Michael McRaith, director of the Illinois Department of Insurance.Regulators say they don't have a specific vision of an alternative, but one possibility would be to use the services of firms such as BlackRock Inc., the asset manager, or RiskMetrics Group, the research firm, regulators say.

BlackRock has developed an expertise in valuing bonds through its BlackRock Solutions unit, which has done work managing portfolios for the Federal Reserve Bank of New York during the credit crisis. BlackRock declined to comment and a spokeswoman for RiskMetrics had no comment. Still, it isn't clear whether other firms would have the interest or capability to deliver the kind of analytical services regulators would require for the variety of mortgage-backed securities held across hundreds of insurance companies.

Also unclear is how any service would be paid for. Currently, bond issuers -- in the case of mortgage securities, typically banks -- pay the ratings firms for ratings, which are then publicly available. In a new scenario, one option might be the National Association of Insurance Commissioners paying for the additional analysis, a cost the NAIC could pass on to insurers in the form of fees. Or the issuers could pay for the extra analysis.

California AG Jerry Brown joins the ranks of Attorneys General to scrutinize the disastrous role the credit rating agencies played in the financial crisis. On Thursday, Brown will announce the investigation's launch. From the press release:

San Francisco - At a news conference Thursday, September 17, 2009 at 10:30 a.m., Attorney General Edmund G. Brown Jr. will announce that he is launching an investigation into the role credit rating agencies played in fueling the financial crisis.

At the peak of the housing boom, these agencies gave their highest credit ratings to complicated financial instruments, including securities backed by subprime mortgages, making them appear as safe as government-issued Treasury bonds. In rating these securities, these agencies worked behind the scenes with the same Wall Street firms that created them. For their work, the agencies earned billions of dollars in revenue, at a rate double what they earned for rating other financial products.

A good starting place could be this instant message exchange between two employees at S&P, one of the biggest rating agencies, captured in our Most Damning Internal Emails Of The Financial Crisis slideshow:

"Official #1: Btw (by the way) that deal is ridiculous.

Official #2: I know right...model def (definitely) does not capture half the risk.

Official #1: We should not be rating it.

Official #2: We rate every deal. It could be structured by cows and we would rate it."

By most measures, the past year has been the worst financial crisis in a lifetime. But not by one significant measure: Bank failures. The Federal Deposit Insurance Corp. has closed 92 banks so far in 2009, after seizing 25 ailing banks last year. By contrast, during the last banking crisis, 381 banks were seized in 1990, 268 in 1991, and 179 in 1992. Still, the pace of bank failures is accelerating. In recent days, three banks failed, including Illinois-based Corus Bank, doomed by $3.2 billion in construction loans, mostly to condominium developers.

The relatively slow pace of bank failures during the crisis is partly the result of government decisions to keep ailing banks open for as long as possible, says Louisiana State University banking professor Joseph Mason. Now, it appears, the FDIC is shutting down the bad banks at a faster rate. Since July 1, the FDIC has shuttered 47 banks, amounting to more than half of the FDIC's financial losses on the bad banks this year. The consensus among banking experts is that two to three times more banks could fail during this crisis, for a total of 200 to 300, says independent market strategist Doug Peta.

Put simply, the problem for banks is bad loans. Institutions have been hit by one type of problem loan after another, says Keefe, Bruyette & Woods analyst Frederick Cannon. First, it was bad residential real-estate loans, including the notorious subprime mortgages. The biggest bank failure of the crisis occurred on Sept. 25, 2008, when the FDIC closed down Washington Mutual and arranged for it to be bought by JPMorgan Chase. Another big failure was on July 11, 2008, when the FDIC, at a cost of $10.7 billion, took over IndyMac, a specialist in risky, so-called Alt-A residential loans.

Mortgage problems persist, but banks specializing in loans to developers have been hit hard in 2009. KBW data show that, of banks that have failed since 2007, an average of 28.8 percent of loans outstanding were construction loans, compared to 9.8 percent for the industry as a whole. At Corus, which failed on Sept. 11, 88 percent of its lending was construction loans. "This year is dominated by construction lenders," Cannon says.

The next problem for banks is likely to be commercial real estate and other commercial and industrial loans, Cannon says. A healthy banking industry is a key ingredient to an economic recovery. Small businesses especially rely on bank financing, which has been hard to get recently. However, an accelerating cascade of bank failures isn't all bad news for the banking industry as a whole. For one thing, bank "seizures are good for the survivors," Peta says. "[Failures] reduce the number of institutions indulging in 'Hail Mary' banking."

In other words, a desperate, troubled bank is likely to offer high rates to attract depositors. That lures customers from strong banks to weak banks. Also, when banks fail, their stronger competitors can gobble up their branches and depositors "on the cheap," Peta says. For example, BB&T Corp. became one of the nation's top-10 banks this month by asset size, according to rankings by SNL Financial. The reason: BB&T acquired Colonial Bank, which has $22 billion in assets, after its closure by the FDIC on Aug. 14.

At the same time, the problems at big banks might be giving smaller institutions a chance to win back market share, says Christine Barry, research director at the Aite Group. In her recent survey of almost 800 community banks, she found that more than half reported adding customers and deposits during the financial crisis. "While a lot of these banks are faced with big challenges, many of them are actually seeing a lot of opportunities," she says.

Since the beginning of the financial crisis, investors have complained about a lack of transparency from banks. Without knowing what bad loans or toxic assets sit on bank balance sheets, it's difficult to assess how risky those banks really are. "The one thing the industry needs is information for investors to sort out who is strong and who is weak," Mason says. Regulators are still reluctant to release this data, for fear of scaring investors, he says. But he believes this approach is counterproductive and could prolong the recession.

Still, banking stocks have rebounded strongly this year, with the KBW Bank Index up 141 percent since its low on Mar. 6. (But the index is still down 56 percent from two years ago.) What has boosted investor confidence isn't information, but the implication that many large banks are too big to fail, Mason says. "They're still living off the life support of various government programs," he says.

A cure for ailing banks is time. With interest rates low, this should be a profitable time for many banks, Peta notes. The housing market is showing signs of recovery, with the most recent Case-Shiller Home Price index rising 1.4 percent from May to June. That's a good sign for a banking industry with many loans related to real estate. "We are making some progress," Peta says. If they make the right moves, some troubled banks can survive long enough, and earn enough now, to make up for losses of the past few years. But for hundreds of less fortunate institutions, time is quickly running out.

he Federal Deposit Insurance Corp. on Wednesday named the first winning bidder under a test of the government's program to back private purchases of toxic mortgage assets and get them off banks' balance sheets. Fort Worth, Texas-based Residential Credit Solutions Inc. is paying $64.2 million for a 50 percent stake in a new company that will have about $1.3 billion in home mortgages from the failed Franklin Bank. The FDIC took over Houston-based Franklin Bank in November. Under the test sale to RCS, the new company will issue a note for $727.8 million to the FDIC. Twelve groups of companies had bid on the assets, the agency said.

The program is part of the government's public-private partnership to guarantee private investors' purchases of toxic assets to help banks raise new capital, get credit flowing and aid the economic recovery.The sale is part of the government's so-called Public-Private Investment Program, announced in March by the FDIC, Treasury Department and Federal Reserve as one of the financial recovery measures. The backing for the private investors' purchases is coming from the $700 billion federal bailout fund, with the government matching private investors dollar for dollar and sharing any profits equally.

The FDIC said it will analyze the results of the RCS-Franklin Bank sale to determine whether the same process could be used to get toxic assets off the balance sheets of banks that are still open and functioning, as opposed to failed banks. Officials have said that the PPIP will aim to relieve banks of up to $40 billion worth of soured investments tied to mortgages. The FDIC pilot sale involved actual mortgage loans rather than the related securities. The closing of the RCS sale is expected later this month, the FDIC said, after which the company will manage the portfolio and service the loans under guidelines for modifying distressed mortgages. RCS is a large mortgage servicing company that deals in modifications for troubled home borrowers. The company had no immediate comment Wednesday afternoon.

FedEx Corp. said Thursday its first-quarter earnings fell 53 percent -- matching its prediction released last week -- and warned its profit will remain weak through at least the end of the year. But the world's second largest package delivery company, considered a bellwether of economic health, said it does see signs of improvement in the global economy as international shipments picked up.

The Memphis, Tenn.-based company reported earnings of $181 million, or 58 cents per share, compared with $384 million, or $1.23 per share, a year ago. Revenue fell 20 percent to about $8 billion. Analysts predicted profit of 58 cents per share on revenue of $8.24 billion. The company said its sales are continuing to be hurt by the slow economy, as people ship slower and less often. The quarter was also hurt by lower fuel surcharges -- the fees it passes on to customers based on the price of fuel.

In its Express segment, U.S. package revenue fell 22 percent on lighter and less expensive packages and lower fuel fees. But the number of packages FedEx shipped domestically grew slightly. FedEx's Ground segment revenue fell 2 percent and average daily volume slipped 1 percent. But FedEx said it was able to offset some of the shortfall by ''vigilantly'' cutting costs. Volume in International Priority -- its most profitable segment -- was also better than expected.

''For more than a year, we have vigilantly managed costs without sacrificing service, invested wisely and minimized job losses so that FedEx will emerge a stronger, more profitable company as the global economic recovery takes hold,'' FedEx Chairman, President and CEO Frederick W. Smith said. FedEx Corp. reiterated its profit prediction of 65 to 90 cents per share for the second quarter ending in November. That's down from $1.23 a year ago. It also said it will raise express shipping rates by 5.9 percent in January. Shares fell $1.20 to $77 in premarket trading.

Ireland's government proposed buying property loans with a book value of €77 billion ($113 billion) from five struggling Irish banks Wednesday, but the country's finance minister said some may still need additional capital. The plan, aimed at restarting stalled lending, faced fierce opposition when it was unveiled by Finance Minister Brian Lenihan in a rowdy session of parliament Wednesday. It is likely to face weeks of debate. The unpopular ruling party doesn't have a majority in parliament, and the plan is reviled by opposition parties, which say Ireland is overpaying and heaping costs on the taxpayer to benefit bankers.

The banks have been paralyzed by bad bets on Ireland's enormous property bubble, which has deflated amid the global downturn. Mr. Lenihan said Ireland would pay the banks €54 billion for the loans, many of them delinquent, but conceded that, according to the government's assessment, they have a current market value of about €47 billion. The extra €7 billion is to take account of the loans "long-term economic value," he said.

Like other nations, Ireland has faced a quandary when dealing with toxic loans: Buying them for a low price forces painful losses on already wounded institutions, but overpaying inflates the cost of the rescue. "We will not pay too much for these assets, but paying too little has consequences for this economy," Mr. Lenihan said. He described the plan as an effective way to encourage banks to lend again.

Under the plan, Ireland would take over the property loans, which include commercial loans to developers, and transfer them to the new National Asset Management Agency, which would have years to try to dispose of the loans and any foreclosed properties. To pay for the loans, Ireland will issue government bonds. The bulk of the loans will come from Anglo Irish Bank Corp., Allied Irish Banks PLC and Bank of Ireland Group. Anglo Irish has already been nationalized, and Ireland has put €7 billion of capital into the other two.

A Bank of Ireland spokeswoman declined to comment. Allied Irish said it expected to raise €2 billion in capital and would seek private sources including equity markets or asset sales. Opposition politicians were fierce in condemnation. "An act of economic madness," said Fine Gael party leader Edna Kenny. Fine Gael and other critics have called for measures such as splitting banks into "good banks" and "bad banks," or even broad nationalization. At the least, opponents say, the government should pay less for the loans.

There is no realistic alternative to the Government’s National Asset Management Agency (Nama), Taoiseach Brian Cowen said during a resumed debate today on the proposed legislation in the Dáil. Shares in AIB and Bank of Ireland have made strong gains today rising over 31 per cent and 16 per cent, respectively, by 4.15pm as investors digested the detail of the Government’s proposal. Both stocks hit one-year highs today.

Green Party leader John Gormley said his party will pull out of Government if its party members reject Nama and the new programme for government at the Green Party’s convention scheduled to take place on October 10th. Speaking on RTÉ’s News at One Mr Gormley said his party would be pressing for further amendments to Nama to promote a social dividend and ensure a windfall tax is part of the legislation. “If Nama and the programme for government is rejected on October 10th we could not continue our participation in Government,” he said.

Bank of Ireland said today the discount applied to loans it transfers to Nama could be "significantly less" than the estimated 30 per cent discount average outlined by the Minister for Finance Brian Cowen yesterday. International reaction to the plan has been broadly sceptical. The Financial Times said: “Either way Ireland is on the hook. The more banks rally, the more likely Dublin will be stung for the recapitalisations that will surely loom. If they don’t, Dublin will have to foot the bill anyway.”

Speaking during the resumed Dáil debate on the issue this morning, Mr Cowen rejected suggestions that Nama is a bail-out for bankers and developers. “Nama is not designed to be and will not be permitted to operate in practice as a bail-out mechanism for anybody who has operated irresponsibly,” he said. Mr Cowen told TDs alternatives to Nama proposed by Fine Gael “unrealistic” and “not founded in any practical plan.” “The suggestion by Deputy Bruton that we can divide most or all of our banks into a good and bad bank system without disrupting the flow of finance to the economy is totally unrealistic and not founded in any practical plan.”

Fine Gael leader Enda Kenny said Nama was a “fatally flawed piece of legislation. He told the Dáil this morning it was the “economics of the madhouse, supported by the fiction of long term economic value”. Minister for Finance Brian Lenihan this morning defended the risk-sharing mechanism provided in the Nama Bill in which 5 per cent, or €2.7 billion, of the €54 billion to be paid for the loans will be in the form of subordinated bonds. This €2.7 billion only be paid if Nama makes a profit. Mr Lenihan said the State was paying €7 billion more than the estimated current market value because the property market was distressed and "we have to provide some allowance for long-term value," he told RTÉ's Morning Ireland .

Under the Government's plan, Nama will purchase €28 billion in loans from Anglo Irish, €24 billion from AIB, €16 billion from Bank of Ireland, €8 billion from Irish Nationwide and €1 billion from the EBS. The full extent of bank forbearance with large property borrowers was revealed for the first time when the Minister disclosed that the loans Nama will acquire include €9 billion in overdue interest payments. In addition, the Government has proposed extending the State bank guarantee by up to five years to allow them to access longer-term debt.

Two-thirds of the properties are in the Republic, 21 per cent are in Britain, 6 per cent are in Northern Ireland, 3 per cent are in the United States and 4 per cent are in Europe. The Minister suggested alternative approaches would end up costing the taxpayer more, with the Labour nationalisation plan requiring an extra €10 billion to €14 billion to recapitalise the banks. Mr Cowen attended a meeting of the European Council in Brussels this afternoon.

Britain is facing the tightest squeeze in public spending since the 1970s, after leaked Treasury documents showed a major deterioration in the nation's public finances, the Institute for Fiscal Studies will warn tomorrow. In a blow to Gordon Brown days after he relaunched his premiership by finally admitting that spending would have to be cut, the IFS will confirm Tory warnings that the last budget in April failed to reveal the depth of the public finance crisis.

The IFS will release its latest commentary on Britain's public finances in the wake of the leaking to the Tories of Treasury documents which showed that departmental spending would be cut by a total of 9.3% between 2010 and 2014. David Cameron seized on the leak to question Brown's honesty. The prime minister told the Commons in June that the Tories were "ideologically committed to 10% cuts in public services" which was "not the policy of this government".

Cameron believes the leaked Treasury documents are particularly significant because key tables, marked "confidential", are dated 21 April 2009 – the day before the budget. The tables, the internal "live documents" used to compile the Red Book which illustrates budget projects, show departmental spending will have to be cut by 9.3% between 2010-2014. Within two months of the budget, Brown launched a month-long attack on Cameron as a cutter in which the prime minister depicted the Tory leader as "Mr 10%" – almost the same amount as the cuts outlined in the Treasury documents.

Downing Street said today that Brown had not misled parliament because no plans had been set out for public spending beyond 2010-11. The leaked documents show such deep cuts in departmental spending because the Treasury predicts a sharper than expected increase in two key costs of the recession – social security payments and debt interest payments – described by Brown in 2000 as the "costs of social and economic failure". The IFS embarked on a hasty revision of its forecasts today because the leaked documents provide a breakdown of projections for government spending up to 2014; at the time of the budget these detailed projections were only provided until 2012.

Robert Chote, head of the IFS, said: "There has been something of a gap between the government's rhetoric and its arithmetic over the period since the budget. The prime minister came up with a variety of increasingly imaginative formulations over the summer to suggest spending wouldn't actually be falling."

The IFS will underline the gravity of the public finances tomorrow when it warns that the unprecedented increase in spending over the last decade will have to be "completely reversed" by the next government – whoever wins the election – unless taxes are raised and welfare payments are cut. Chote said: "The Treasury is expecting to pay a lot more in debt interest, social security payments and other things it doesn't have much day-to-day control over. We are looking to have to cut public spending by 3% a year in real terms. We haven't seen anything like that since the 1970s."

But the IFS report will also place pressure on Cameron. It shows that the Tories will have to cut departmental spending by 14% from 2011-14 if they maintain their two spending commitments – to increase NHS spending in line with inflation and to meet the UN target of spending 0.7% of GNI on overseas aid by 2013. Cameron, who last week pledged to increase public spending at a lower rate than Labour, today refused to rule out imposing cuts beyond the 9.3% in the Treasury documents. "If you start [cutting] earlier it is a less painful and better process because you want to start from a lower base," he said.

The leak

What do the leaked Treasury documents reveal?The forecast on the eve of the last budget that departmental spending would be cut by 9.3% in 2010-2014.

Why such deep cuts?The breakdown of government spending until 2014, not released at the time of the budget, shows a sharper than expected increase in social security and debt interest payments.

Will this lead to a revision of spending plans?Not for Labour which has not made any commitments after 2011. The Tories have two commitments: to increase NHS spending in line with inflation and to meet the UN target of spending of 0.7% of GNI on overseas aid by 2013. The IFS, which had said this would mean cuts of 10% in other areas, will say this will mean 14% cuts.

UK retail sales surprisngly stalled last month, with clothing and shoe sales declining, in a sign Britons are still feeling the financial squeeze of the downturn. Figures from the Office for National Statistics showed that sales across the high street were flat compared with July, when they recorded a 0.2pc fall. Economists had forecast that sales would see a 0.1pc gain. John Lewis, the department store chain, and fashion retailer Next have both said this week that although an Armageddon on the high street has been avoided, the British consumer is going to remain under pressure next year.

It's a view echoed by Mervyn King, the Bank of England Governor, who said earlier this week that although there are signs the economy is now growing again, it's unlikely to feel any different for ordinary people. “Consumer spending has been fairly resilient, but with growth below its potential unemployment will continue to rise and that will hold back consumer spending,” said Alan Clarke, an economist at BNP Paribas.“ Today's figures showed that sales at non-food stories fell 0.6pc; sales of food increased 0.7pc.

Forest fires are judged to be nasty, especially when one’s own house or life is threatened, or when grave harm is being done to tourist attractions. The popular conviction that fires are an unqualified evil reached its zenith after a third of Yellowstone Park in the US was destroyed by fire in 1988. Nevertheless, conventional wisdom among forest managers remains that it is best to let natural forest fires burn themselves out, unless particularly dangerous conditions apply. Burning appears to be part of a natural process of forest rejuvenation. Moreover, intermittent fires burn away the undergrowth that might accumulate and make any eventual fire uncontrollable.

Perhaps modern macroeconomists could learn from the forest managers. For decades, successive economic downturns and even threats of downturns (“pre-emptive easing”) have been met with massive monetary and often fiscal stimuli. This was the case when the global stock market crashed in 1987, and it was repeated when the property boom in many countries collapsed in the early 1990s. Interest rate rises were put on hold during the Asian crisis of 1997, even though traditional indicators said some industrial countries were overheating. Rates were then sharply reduced in 1998, after the collapse of the hedge fund Long-Term Capital Management, and were lowered again when the stock market collapsed in 2001. Today, policy rates in most industrial countries are close to zero, in response to the financial crisis.

What needs reflection, against this backdrop, is whether the policy reaction to each successive set of difficulties laid the foundations for the next one. Worse, the encouragement by lower interest rates of debt accumulation and spending imbalances was the equivalent of undergrowth accumulating in the forest. This undergrowth not only made subsequent downturns more dangerous; it also made the available policy instruments less reliable in response. Looking back over successive cycles, interest rates have had to be reduced with ever more vigour to get the same (and sometimes reduced) response from spending. Most recently, new and untried policies such as quantitative and credit easing have had to be introduced. Logically, the end point of such a dynamic process would seem to be the mother of all fires and few if any means of resistance.

The current Keynesian mindset rightly observes that we have a shortage of aggregate demand. It then concludes that demand stimulus, from whatever quarter, is to be welcomed. However, in addition to the undergrowth problem on the demand side, we can also have an undergrowth problem on the supply side. This was the core of Friedrich Hayek’s position when he debated Keynes in the early 1930s. In response to demand stimulus over recent decades, with investors implicitly assuming that the future would be like the recent past, there has been a massive increase in supply potential in many industries. The upshot is that many of them are now too big and must be wound down. This applies to automobile production, banking services, construction, many parts of the transport and wholesale distribution industries, and often retail distribution as well. Similarly, many countries that relied heavily on exports as a growth strategy are now geared up to provide goods and services to heavily indebted countries that no longer have the will or the means to buy them.

In this supply side context, policies such as “cash for clunkers” and value added tax cuts in countries with very low household saving rates and massive trade deficits are clearly suboptimal. So too, in countries with large trade surpluses, is resistance to exchange rate appreciation along with a continuing reliance on export demand. Such policies are equivalent to trying to resuscitate a patient long since dead. Not only will time prove that such attempts are futile, but they also impede the desirable adjustment from declining industries to those that should be expanding. In effect, relying solely on macroeconomic stimulus may well head off a more violent downturn, but only at the expense of a more protracted recession. Maybe this is the principal lesson to be drawn from Japan’s almost two decades of sub-par performance. Indeed, resisting structural adjustment could also imply a decline in the level of “potential growth” in the years ahead. This would bring with it the threat of a stagflationary outcome, if the demand stimulus from Keynesian policies were not to be adjusted downwards in consequence.

Where to go from here? In terms of future crisis management, governments should give more weight to the longer-term implications of their policies. Those that threaten to make future crises more costly, or that impede required structural adjustments, should be moderated. Such inter-temporal trade-offs imply, from time to time, accepting a temporary economic downturn to avoid even bigger future costs. In this sense, good crisis management also contributes to crisis prevention.

But still more might be done with crisis prevention. Just as good forest management implies cutting away underbrush and selective tree-felling, we need to resist the ?credit-driven expansions that fuel asset bubbles and unsustainable spending patterns. Recent reports from a number of jurisdictions with well-developed financial markets seem to agree that regulatory instruments play an important role in leaning against such phenomena. What is less clear is that central bankers recognise that they might have an even more important role to play. In light of the recent surge in asset prices worldwide, this issue needs urgent attention. Yet another boom-bust cycle could have negative implications, social and political, stretching beyond the sphere of economics.

William White is former economic adviser, head of the monetary and economic department at the Bank for International Settlements.

The turmoil since August 2007 has not been blamed directly on oil prices but there’s a link. “The US has experienced six recessions since 1972. At least five of these were associated with oil prices. In every case, when oil consumption in the US reached 4% percent of GDP, the U.S. went into recession. Right now, 4% of GDP is US$80 a barrel oil. So my current view is that if the oil price exceeds US$80, then expect the U.S. to fall back into recession,” wrote Steven Kopits, managing director for U.K.-based energy-consulting and -research firm Douglas-Westwood LLC in New York.

Kopits is a poster boy on all the “peak oil” websites and doomsayer blogs, and his metric on the link between recessions and oil price is interesting. If Kopits is correct, so much for “green shoots”. They will be trampled under foot over and over again unless there is a sudden spike upwards in GDP growth disproportionally more so than oil price increases.Here is the roller-coaster cycle he points out: Higher oil prices mean recessions, recessions mean less consumption then lower oil prices which leads to less exploration and supply which leads to higher oil prices and recession again.

Solutions? Stop drivingThe reality suggests that there are only two antidotes to this vicious cycle. Gradual price increases mitigate the negative effect of oil price increases. Recessions follow jumps of 50% within one year. The Saudis and OPEC plus other producers would have to play a role in modulating prices. Or else consuming nations must reduce consumption dramatically through legislation, taxation and rationing. Or crude oil expenditures should not exceed 4% of GDP and this must be mandated by governments.

Here are some other Kopits’ views affecting oil and economic conditions:

Kopits on supply: “If I dispassionately just look at the numbers, the oil supply has not improved that much since the 4th quarter of 2004. And I don’t see anything on the horizon that makes it appear that we’re going to break out into a really new level of production that’s far different than what we have today.”

Kopits on demand: “Consumption will tend to grow faster in developing economies for two reasons. First, by their nature, developing economies should grow faster than mature ones, and this has been generally true of east Asia and strikingly so in the case of China. So faster economic growth means faster growth in demand for oil. Further, oil consumption growth follows an “S”-curve.

At low levels of GDP, oil demand growth is quite slow. Once a country has reached middle class income levels, per capita oil consumption stabilizes. However, in the middle, as a country becomes middle class, oil demand growth can be explosive. Take South Korea, for example. South Korean per capita oil consumption peaked in 1996; however, in the previous 12 years, the country’s consumption increased nearly fourfold. China is now firmly on the S-curve. Based on South Korean experience, we would expect Chinese oil demand to stabilize at around 50 mbpd around 2032-2035.”(China currently 8 million per day, US 20 million, Japan 5 million).

Kopits on price: "If you have a flat—or heaven help us, declining—supply of oil, then the emerging and fast-growing economies will have no choice but to start bidding away the oil from the advanced or slow-growing economies. That is consistent with what we’ve seen in the data starting in about 2006. For China to grow, it will have to take away the oil of Japan, the US and Europe, just as it has in the last three years.”

The global airline industry faces $11 billion of losses this year, $2 billion greater than previously forecast, as business travel remains in a slump and fuel prices are rising, the International Air Transport Association said Tuesday. The trade body expects airlines to lose $3.8 billion world-wide in 2010, as carriers struggle to generate revenue from their best customers, who either aren't flying or are buying less-expensive tickets. That would mark a third straight annual loss. IATA estimates the industry lost $16.8 billion last year.

IATA sees premium passenger traffic falling 20% in 2009. Traffic in the back of the cabin is expected to drop 5%. The low demand for high-priced seats is expected to push yields, or revenue per passenger, down 12%. Historically, it has been difficult to rebuild yields once they fall, Giovanni Bisignani, IATA's chief executive, told reporters. Following the last airline downturn, after the Sept. 11, 2001, attacks, it took the industry more than three years to reach 2000 revenue levels.

Now, the airline industry needs to make structural changes to regain its footing, Mr. Bisignani said. That includes more consolidation in the U.S. and Europe. He also said airlines should keep pressing governments for expanded "open skies" agreements to get past regulations that hamper global carriers' growth. Near-term, Mr. Bisignani sees more airline bankruptcies, on top of nearly 50 resulting from the current recession. "In the last year-and-a-half, medium-sized airlines from all parts of the world" have fallen victim to the downturn, he said. The IATA is now monitoring some 20 airlines with financial problems.

Mr. Bisignani said air travel in the U.S. and Europe will remain weak for the rest of 2009. For the full year, IATA expects North American carriers to lose $2.6 billion and European carriers to lose $3.8 billion. Some regions, including Asia and the Middle East, are beginning to recover from the global recession, the group said. IATA also reported that air-cargo traffic -- an early sign of any potential economic recovery -- is picking up, following a sharp downturn. Airlines have curbed the impact of the downturn by adding new passenger fees, Mr. Bisignani said. IATA reported that sales not related to tickets or cargo account for more than 10% of global airline revenue.

Canada's poverty rates — particularly for working-age Canadians and children — are among the worst in the developed world, the Conference Board of Canada reported Thursday. Canada received an overall ranking of ninth among 17 countries for a collection of social measures of social cohesion, equity and self-sufficiency according to the report, conducted annually.

While the report commended Canada for its relative diversity, low homicide rate, and higher than average income for disabled citizens, it said the poverty rates were alarming. "Considering how wealthy this country is, these rates of poverty are unacceptable," said Conference Board president and CEO Anne Golden in a statement.

More than 12 per cent of the working-age population was living in poverty in 2005, an increase from 9.4 per cent a decade earlier, the report found. That ranked 15th among the 17 countries surveys — ahead of only the United States and Japan. The child poverty rate also increased from 12.8 per cent in 1995 to 15.1 per cent in 2005, ranking Canada 13th among the 17 countries.

While Canada's poverty rate among the elderly has been historically low compared to other countries, the report also found that elderly poverty rates are also on the rise, from 2.9 per cent in 1995 to 5.9 per cent in 2005. Golden called this "disconcerting" and said when newer data becomes available, "we can expect this trend to persist." The group said some of the reasons for the rise are more people living alone, an aging population and a drop in the real earnings of male middle-income wage earners.

Denmark had the highest societal ranking among the nations polled. Also receiving an 'A' grade were Norway, Sweden and the Netherlands. The United States ranked last among the nations studied.

"Customers of Commerce Bank and TD Banknorth in the Mid-Atlantic, Metro Washington, DC and Florida Markets can bank at any of our more than 575 rebranded TD Bank Stores. TD Banknorth Customers, however, should continue to use the TD Banknorth website and ebillpay at tdbanknorth.com "

Gleaned from Wikipedia

TD Ameritrade is a subsidiary of TD which holds less than 45% of the shares.

Both banks, Toronto and Dominion started in the second half of the 19th century. They merged into TD in 1954. They merged with Canada Trust in 2000.

An examination of the personal banking of TD Bank NA indicates conclusively that their accounts have standard FDIC insurance. It is a subsidiary of the Canadian bank, Toronto Dominion which is Canada's second largest bank.

In March 31, 2008, the acquisition of Commerce Bank by TD was finalized and on Oct 31, 2008, all Commerce Bank branches were completely switched over to TD Bank NA. The acquisition of Commerce Bank by TD Canada appears, at least on the surface, to be a voluntary sale and merger and not forced by the recent banking crises

TD Bank appears to be well represented in the mid-Atlantic, New England, and Florida states with a large emphasis on customer service. They are open seven days a week.

________________________

I want to replace Scotia Bank of Puerto Rico as my corresponding bank to TD.gov. I just realized that I can probably make directelectronic payments from my broker, TD Ameritrade **into** TD.gov. I will check this out today. (Sorry about all the confusing "TD's." Of course there is no connection between Treasurydirect.gov and the other TD's.)

Anyway, the reason I am posting this here, is that we are all looking for a safer bank. If your corresponding banks collapse, you have no way of getting your money out of TD.gov.

Bank Failure Friday just posted:

"Regarding TDAmeritrade, yes, I'm a sucker for this stuff and so did the legwork.

I presume this is TD Bank in Portland, ME. They look impressively good from the banktracker info.

The TAR of 0 isn't just because they're new. Look at the financial details below the TAR values. They've been around at least for a year, long enough to be reporting bad loans.

Look at the 2009 figures, the "Non-accruing loans". My limited understanding (and I'm a novice here) is that these are the bad loans.

A mere $480,000 out of $26 Million in deposits. I've seldom seen such good numbers.

Personally, if they had a local office, I'd be using them. I can't tell, as their web site seems to be having problems right now."

____________

BTW, I had no trouble getting on their web site this morning. Before I fly back to NYC from Mexico just to open up the account and set them up as a second corresponding bank to TD.gov, I would like to hear a bit more feedback from people who know more about evaluating bank health than I do. This could also be useful for other TAEers residing in the mid-Atlantic, New England, and Florida states. A safer bank is a major component of the TAE mandate :-)

Sorry, I realized that I left your question unanswered about safe deposit boxes.

"but have you got any recent documentation / links of their sticky fingers w/o a proper warrant?"

My understanding from what I read in the media (and I'm not a finance guy) is that no warrant is required.

The FDIC views these as assets of the banks and can just seize what's in the boxes in order to sell them to raise money.

Also, safe deposit box robbery is on the rise. I saw a news article about this a couple months ago. The bank leaves you high and dry withvarious broken promises, unless you have insurance on the items.

Also, before you put any money into a bank, I always look at the recent Call Report: FDIC Call Reports

These things are boring as heck, 50+ pages of accounting info. What I look for is their derivatives and tier 3 statements.

I've seen a number of banks look good, but are exposed to derivatives. That's not what I personally look for in a bank.

TD Bank in Portland, ME has some small stuff there. I'm slightly concerned about it, but I still like them.

They seem to be much better than most of the other banks that I've looked at.

With any bank, I'd be keeping a close eye on them during these times. Watch banktracker every quarter.

Ilargi said ...“Yes, prices would collapse, but isn't that the very obvious best thing that could happen for those who want to buy a home? Spending all those trillions just to keep up appearances a little longer, it's really the worst possible way to spend public money.”

Let’s cut to the chase ...

You have borrowers, middle men, (finance and legal industry), and lenders.

Ask yourself, ...What would happen if the lenders were to have access to the borrowers and were able to negotiate new mortgage terms? Would they keep a house off the market gathering expenses or would they sell?

Lenders would discover that the middle men have taken their bonuses/wages, etc. and that their savings have disappeared.

Therefore, ask yourself, ...

Who is being protected by all of those trillions of dollars of public money in the real estate market?

Who is being protected from what and from whom?

I’ll tell you ... the middle men are being protected from their lenders.

Yes ... if the lenders found out that they had been scammed they would revolt against their money handlers and demand retribution. Go back to yesterdays post and look at the numbers of court cases ... lenders wanting retribution. jal

It is ironic to see you left leaning posters here (and that includes you Ilargi and Stoneleigh) complaining about our money being used to pay for our neighbors debt and house etc. At the same time, lefties are looking for a universal health care system, where our money goes to pay for someone else's health care.

What exactly is the difference? And what really is the problem, according to the social contract, of helping to pay for someone's home, health care, or debt if they cannot afford it?

Where do you lefties draw your line of hypocrisy?

What Bernanke is doing is socializing our debt load. Why are you against that but then advocate socializing our health care? Granted they are not the same exact things, but they are certainly on the same continuum. I mean, after all, noone really means to get ill. Just as noone really meant to buy a house they would not afford in the future.

Right wingers get an awful lot of attacks here for being against all of this socializing- in whatever form. I would love to see a political party breakdown of exactly who is in debt. My bet would be there are far more liberals in debt than the right wing nuts.

How can you advocate socialism for certain parts of our society and rant against it for other parts?

How can you not see that this socializing will allow us to plod on through for a long time, as we learn to live with less and less, until we reach a point of socialist utopian bliss?

AmericaCanada has a new post up. It seems like many of the 19th century Dominions, when we go down, are going to go down-under faster than the mother country or her independence day offspring.

Anybody buying the line about Canadian banks being safe - a model for the world no less - should take a closer look at the banks' financial statements, then multiply by 10 and then factor in that we haven't had our real estate meltdown yet (although we're taking this opportunity to pile on lots of dry wood, soaked in gas, so we're ready for the smoke to waft north).

I suspect Cdn banks are safer for the time being (perception being everything) but you will still need to pay extraordinary attention. My opinion is that, as we move closer to the next wave down, it is better to convert as much of your liquid wealth into objects that will enable sulf-sufficiency. A fair wad of banknotes and, in a prelude to a notice I plan to post in a few weeks, a stack of Canuckistan savings bonds.

Unlike Stoneleigh's lifeboat list, mine would not include the accumulation of gold, at least not at anything near $1000/oz.

I consider myself a conservative so after Rodent's defense of Glenn Beck yesterday I decided to give Mr. Beck another chance. Maybe I had misjudged him. I went to his website and clicked on his first video. The first thing he did was to accuse Tara O'Toole (up for a job in Homeland Security) of being a Marxist. Two minutes of web research shows that this is an old charge that has been debunked in congressional hearings. There are reasons why she should possibly not be in Homeland Security that are worth discussing (though less sensational), but being a Marxist is not one of them. This is the kind of thing I hear every time I listen to Glenn Beck. It is true that I have never listened to an entire hour of Glenn Beck; Sorry, but I just can't stomach the man for that long.

Like Rodent, I am pro-truth. Mr. Beck is right about some things but I just can't watch him. He lies for effect and when called on it he says, for example, that he is a commentator and therefore need not fact check. For me a lie in support of the truth sullies the truth.

"Fear that the U.S. is on a long march to fascism. (As evidence, Beck cited — on April Fools' Day but apparently seriously — the inclusion of fasces on the Mercury dime in 1916.) That fat cats and bureaucratic "bloodsuckers" are plundering your future. That Mexico will collapse and chaos will pour over the border. That America believes too little in God and too much in global warming. That "they" — Big Government, Big Business, Big Media — are against you. Above all, that you, small-town, small-business America — Palinville — have been forgotten. Dismissed. Laughed at. Just like him.

... He channels anger against Wall Street but defends the bonuses for AIG executives. He devoted a segment to debunking a conspiracy theory about FEMA "concentration camps" but has warned that the AmeriCorps program "indoctrinates your child into community service."

All from Time Magazine, so obviously suspect. But the lists of Beck bull are ubiquitous.

So many lunacies, so little time.

He attacks Bush?? Be still my heart. I bet he thinks Attila the Hun was a bad person too. How effective.

But, regarding Mr. Beck, it is his MANNER and even though I might agree with him on something, for instance the bailouts (anti), He rants and raves and has trashed so many innocent people as "marxist", "pinko", etc. that I cannot watch for more than a few minutes.

I Heart Bernanke - "At the same time, lefties are looking for a universal health care system, where our money goes to pay for someone else's health care. What exactly is the difference?"

I don't think it is "lefties" wanting it, it is just good caring people. Surely you do not equate an dealing with an unwanted catastrophic illness with taking out a bad loan! ?

FDIC calls it a 'success' to sell 50% of $1.3B in mortgages to RDC for $64.2M? Lessee... that's 9.9 cents on the dollar, PLUS an explicit guarantee that the buyer cannot lose! Backed by the tax dollars of those same mortgage holders, of course.

SO!Stay in your house, make usurious payments for three decades, and RDC gets 1000% profit, or you can walk away, live under a bridge, and work at Denny's in order to pay your taxes so that RDC will at least break even.

Where do I sign up? Oh, wait, somebody already signed me up - for the sharp end. But there's a $64 mil buy-in for the profiteer's end of the deal.

I Heart Bernanke - refreshing to see a commenter wearing it on their sleeve like that.

The difference between bank bailouts and government support for mortgage holders vs universal medicare seem pretty obvious to me.

Support for mortgage holders has nothing to do with the little guy keeping a roof over his head and everything to do with bailing out in various creative ways the banks and other entities that blew up the credit and housing bubble and are now desperately trying to get it re-inflated so they don't come crashing down in flames.

On the other hand, you have a health care system that, on a per capita basis, costs about 30% more than ours (Canada) and has huge disparities with about 18% of your population with no coverage at all. If you adopted a single payer system like ours, that 30% skim of excess capacity, admin costs and profits could be saved while everyone gets covered. The math is simple if you care to look virtually anywhere beyond your border.

A universal system would also lift a huge cost burden from your business sector who would no longer have to support health care for their workers. Ford, for instance, was paying more for health care than steel at the peak and most of it was for their retired workers. Imagine how much more competitive they would have been if they didn't have to carry that burden.

We're talking apples and oranges here.

I don't pretend to speak on behalf of I&S but that's my take on your question.

I'm waiting for the employment shoe to drop in the health care ruckus. It happens whenever the military try to kill a boondoggle - they cry "but if you quit making billion dollar useless jets, it will put 5,000 very good voters out of work!! No, no!"

Just think of all the paperwranglers who would be out of work if health insurance were simplified. Unthinkable.

We are certainly deflating. Velocity of money is still falling. Dollars are becoming more valuable.

How is it then that the US Dollar Index -dollar compared against a basket of other currencies- has declined about 15% in six months?

Are the euro, yen, pound,Canadian dollar, krona and Swiss franc experiencing greater deflation than the U.S. is, making them more valuable monies compare to the $ at the moment? Anything else explain this?

"The FDIC views these as assets of the banks and can just seize what's in the boxes in order to sell them to raise money."

I am fairly sure that you are incorrect as to this. Paul Grignon in Money as Debt II points explicitly out that a deposit is a loan to the bank while any money in a SDB is not. A SDB is simply a storage contract. Of course, if we were still operating under the rule of law, the government could get a warrant to examine the contents, and could confiscate the contents if they could show they were from criminal enterprises (other than those of our governments themselves). I feel the main danger right now from keeping any assets in a SDB is that one would be locked away from them in the case of a "bank holiday." I have also heard of some outright theft by employees of valuables, but i think it is still pretty rare.

Stoneleigh tells us to use our creativity. I've done my best but it's tricky. I have tried to diversify my risk so if one area blows up, I will still have others.

" Just think of all the paperwranglers who would be out of work if health insurance were simplified. Unthinkable."

I recall a march of insurance salesman in Toronto in the early 90s to protest proposed public auto insurance in Ontario. Bob Rae goverment (supposedly "socialist") backed down, and the crooks continue to rake in the easy money to this day.

Somehow over the course of life, we've ended up with 3 banks and a credit union. So instead of deciding which is the safest to put all the money, we have some in each institution. Then, if the FDIC declares that only a specific amount could be withdrawn per month, in order to keep peaceful depositors, at least we might be able to withdraw that amount from each of the four institutions.

At this time, I don't think the government would want to see thousands/millions of angry people if told they will never be able to have any of their savings, especially since everyone believes their money is insured by the FDIC.

Anyway, I believe limiting the amount withdrawn was done during the Savings and Loan crisis, I think to $1000 per month per S&L?

Bigelow said..."Could somebody brighter than me help with a question?"

I am afraid I don't qualify, as excluding a few anonymice, I may very well be the dumbest person on this site. And that is not false modesty.

That said,

Forex exchange and deflation are two totally different animals probably less joined than the stock market and the economy.

Forex is simply determined by the desire of some one with one currency to buy another. Deflation is the shrinking of the money and credit supply.

It is quite possible for a country to go through a huge debt default resulting in massive deflation, with people in other countries having no desire to buy into that currency.

Before I became interested in macroeconomics because of the approaching tsunami, but after I decided to retire in a country where a buck went a lot further, I was intrigued by the relative buying power of a currency. Why could USD 2.00 buy you a quarter roasted chicken with soup, potatoes, and salad bar in a clean restaurant in Peru, yet could not buy you some diluted HFCS in a McDonalds in the USA? A recurring mystery of the universe.

6/6/08 Mike "Mish" Shedlock, has written about the raids of safety deposit boxes in California and London. He has links to the ABC article (about Calif) and the British Telegraph article in this link. The raid in California, is quite shocking. Lawsuits have been filed.

Terns (like humans) nest in huge populations in very close quarters. So they have specific body movement that indicates they are submissive and just want to pass by a neighbouring nest. Some of course have learned to use this to their advantage. They submissively approach the nest, and when the mated pair allows them access , they turn on the pair and attack the nest, eating the eggs/young.

This doesn't bode well - we've got a LCL on the water from Mumbai to Felixtowe - just been told the cargo is going to be a week late.Why? They're diverting to Rotterdam to sell the boat!Wtf? Never happened before - do you really take on cargo to one destination if you're going to sell the means of transport in another?

"It is quite possible for a country to go through a huge debt default resulting in massive deflation, with people in other countries having no desire to buy into that currency."

That makes sense in terms of the massive outflow of funds from the US in the TIC report. So domestic dollars are more valuable than international dollars. But that still seems difficult, in that so many imploding international paper "assets" are in dollars too making the dollar scarcer internationally too.

The most currency trading I've done is buy pesos at the airport. I know this is eventually moot as are all fiat monies, however in the medium term one money might just hold it's value better than another ...at least till the U.S. puts up currency exchange controls.

I love gardening but having had surgery a farmer I'll likely never be. Hence maintaining savings is obviously important.

I meant no animal is capable of that degree of hatred and violence. The degree of hatred and violence experienced by some human beings can inflict large-scale and systematic suffering, unlike the beasts.

Thanks for mentioning the book. I'll check it out. My older son is fascinated by wolves.

One might consider this off topic, but I don't think so. My anthropologist friends from Antares tell me this kind of thing is why no other civilizations want us to know they exist-

Jerking Off While Rome (the World) Burns

http://tinyurl.com/lfybt2

you may want to watch with the sound off.

If you pause it during a parade, you can see the truth; these girls were captured when they were 5, and put into sex slave robot school. As soon as they get off the stage, the are put back in their dungeons.

Critical info: I'm inside for lunch, and Spice is in bed with a mask on, and little else.....

She has H1N1 New Flu.

"Bigelow said...@el gallinazo

"It is quite possible for a country to go through a huge debt default resulting in massive deflation, with people in other countries having no desire to buy into that currency."

While it's not an across the board default, I have been interested to watch the world reaction to the Chinese government's directive to their banks that if they want to default on derivative contracts and other stuff, like silver contracts; it's totally ok with the central government.

There's been lots of huffing and puffing on the sidelines, but little MSM coverage beyond original notes; and no counter threats from other countries to do something mean to China if China does something mean to them.

The dollar's in the dumpster, and nobody's worried -- for nowSeptember 18, 2009 The dollar has taken a renewed pounding over the last two weeks, driving the DXY index -- which measures the buck’s value against six other major currencies -- to nearly a one-year low.

The Canadian stock market is up 28% in Canadian dollars this year, but it's up 47% in U.S. dollars. The Australian market is up 26% in Aussie dollars -- and 56% in U.S.jal

What props a currency in forex even more than buying with another currency is trading goods in that currency. When Kissenger cut a deal with the Gulf states that they would only sell their oil in USD to anyone, that set the dollar for the next 30 odd years. Peru, for example, has to buy dollars with Soles if they want any gasoline. That's why Saddam was such a threat when he started selling crude in Euros. That's what sealed his fate. Same situation for Iran, though Iran may be a tougher nut to crack. Can't see a successful land invasion by a joint Israeli / US task force. Do feel that bombing is already in the can due to the high futures price of oil. If Da Boyz are smart enough to sell off their own stock, they are smart enough not to go long on oil unless they expect a shut down in the Persian Gulf to more than compensate for the immediate demand destruction of a collapsing economy. And progressives will decry it as just plain stupid as it will finish off the economy, while in reality it is simply evil. The conservatives will decry the progressives as traitors, and Da Boyz will make a bundle.

Anyone who believes this is going to end well is smoking the _real_ good shit.

---

The only way to "rebuild" any real fund (FDIC or otherwise) is to go The Joker route and basically throw money (soon to be worthless) out at anyone who will claw over enough people to get to it.

But, since the US $ is functionally worthless anyway, the entire US economy, culture, and nation is about to "Go with a smile..."

Bank Failure Friday makes the point as to why I could not, even if I had the money, be into gold. Confiscations of various types seem to already be on the rise out of safe deposit boxes and the like. What is it going to matter if gold is $2,000/oz if it's clear that the government is seizing it all for one purpose or another, just like they did in the first Great Depression?

Ilargi: They ARE starting early today. Makes you wonder how many they are going to have to deal with today...

Bigelow: Well, it's not that the $ is becoming more valuable -- it's that the currencies which MIGHT be are not the ones of the First World, at least as the First World has been constructed. Hint: China.

If Canadian real estate is such a great item right now, why did Wells Fargo cease Canadian operations entirely clear back in July? Do they smell something bad in the far north?

First, wow, I didn't even know they were here. Apparently 130 branches across the country or 1 branch per 70,000 sqkm.

Second, they're still here although they just do loans, not mortgages (which ceased in July), and the kindly young lady on the phone said they were hoping to get back in to mortgages. When most of the risk in most new mortgages is absorbed by CMHC, you can bet she ain't lyin'. BTW, this employee picked up the phone on the second ring. Like, WTF? I put the phone on speaker and started unloading the dishwasher when she said hello.

Third, WFC still exists because it is TBTF, not because of prudent fiscal management.

It describes want actually goes on. Note the phrase "They check the safe deposit boxes," The phrase here is unclear as to whether they do an audit of contents (which may be permitted), or of just the records.

Yeah, one could flee to a Yuan currency account @Everbank. But it is still an internet bank and Yuan isn't really convertable. HSBC just got government go ahead to offer Chinese gov. Yuan bonds outside of China.

Second, you are quite right about republicans/conservatives and income/wealth/debt.

"Republicans tend to be older, more educated, higher income and are more likely to be male; each of these characteristics is strongly associated with political and economic knowledge. When these characteristics are held constant – that is, when Republicans and Democrats with similar demographic characteristics are compared – there is little difference between the two groups."

The implication is that is that wealth and age are highly correlated with a conservative stance.

Now it's important to separate out whether people are conservative because because they are wealthy or conservative because they are old. People tend to make more money as they get older and have correspondingly lower levels of debt. People also tend to get more conservative as they age.

In the US conservative is closely associated with the republicans, but in the former soviet union circa 1990 the conservatives were communists. They wanted to preserve the world they understood and they were right to try. The elderly were disproportionately effected by the collapse of the USSR because they were passed their prime working age and their savings and pensions were wiped out by inflation and default.

Changing the rules of the game has a different effect on those about to retire from the game and those just getting started. That is a big part of the reason young folks are radicals and old folks are conservatives.

The PPT now has full cover working with the blatantly fraudulent government. There is no way they let the stock market crash this fall, especially given what happened the same time last fall. No way. Watch

WASHINGTON, Sept 18 (Reuters) - President Barack Obama's top economic adviser said on Friday that China's massive holdings of U.S. government bonds are a source of mutual benefit.http://tinyurl.com/lfgwbg

The PPT now has full cover working with the blatantly fraudulent government. There is no way they let the stock market crash this fall, especially given what happened the same time last fall. No way. Watch

No . . .

The market will crash when Da Boyz determine that this phony-ass rally has sucked in the last remaining fool, and it's time to bleed off a few trillion by going short and pushing it off the cliff.

The PPT will stand as much chance at stopping that tsunami as a fig leaf does in a hurricane.

You are confusing two different types of socialism. Socializing of the cost and socializing of the industry, often called nationalizing.

The majority of American's and American companies want a single payer system for healthcare like the rest of the modern world has. This would be socializing or nationalizing the industry. But, it isn't politically possible for various reasons so we are debating socializing the cost of a privately run system.

Socializing the cost is generally a horrible way to deal with most industries. Private prisons are a great example. Take for example the brilliantly named Wackenhut:

In 1999, Wackenhut was stripped from a $12-million-a-year contract in Texas and fined $625,000 for failing to live up to promises in the running of a state jail; moreover, several guards were indicted for having sex with female inmates.[citation needed] In Fort Lauderdale, Florida, five guards at a Wackenhut work-release facility were fired or punished for having sex with inmates.[citation needed] In April 1999 the state of Louisiana took over the running of Wackenhut's 15-month-old juvenile prison after the U.S. Justice Department accused Wackenhut of subjecting its young inmates to "excessive abuse and neglect."[citation needed] In the same year a New Mexico legislative report called for a near-total revamp of prison operations, including two run by Wackenhut.[citation needed] U.S. journalist Gregory Palast commented on the case: "New Mexico's privately operated prisons are filled with America's impoverished, violent outcasts — and those are the guards."[2] He catalogued lax background checks before hiring guards, which led to several alleged cases of guards physically and sexually abusing inmates. In the U.S., Wackenhut has appeared in the federal courts 62 times since 1999, largely resulting from prisoners' claims of human rights abuses.[2] The company has been accused of trying to maximise profits in its private prisons at the expense of drug rehabilitation, counselling and literacy programs. In 1995 Wackenhut was investigated for diverting $700,000 intended for drug treatment programs at a Texas prison.

As for the bailouts, we are again socializing the cost but not the industry. Even in cases like Citi, AIG, Freddie, and Fannie where the government owns a large percentage of the company the government is ostensibly avoiding running the companies. They continue to be publicly traded companies. The governments primary role is to foot the bill. The same is broadly true of the TARP funds and other bailout packages

OK, so Greenpa asked for one example of Glenn Beck bashing a Republican, I gave it to him (Bush), and now instead of conceding the point, we turn to "What animal does Glenn Beck remind you of?"

For all your accusations of the hateful Glenn Beck, nobody has even watched his program (because you "can't stomach him")? Really? You can't stomach him calling Republicans on their hypocrisy and their lying and their disregard for the Constitution and then watch Beck doing townhall meetings with small business owners on the implications of cap and trade? That might hurt?

You guys are losing your credibility.

I thought there was some intellectual honesty here, but apparently you can't see through your ideology, and that matters. Because the truth matters.

So, I handed you an example of a Republican as asked and in return, instead of giving Beck credit, we're talking about what animal he looks like?

The PPT now has full cover working with the blatantly fraudulent government. There is no way they let the stock market crash this fall, especially given what happened the same time last fall. No way. Watch

Precisely.

Many here have poked holes in I&S analysis because of this very fact.

They never account for the schemes that will be employed to make this go for a long time.

The sky will always be falling for I&S.

They act as if there is no larger plan at work. They claim that guys like Bernanke and Geitner are buffoons for not seeing what they see.

I think there are plans much larger than either of you have ever imagined. Your exasperation over things being so bad and not having collapsed is like listening to the left wing nuts warn that Bush was a new Hitler. That Y2K was the end of civilization. That peak oil would be the end of us all. You are always looking for that spark that you think will plunge the world into your dystopian fantasy.

* Some like what Glenn Beck says but not how he says it; Beck is compared to various animals; Some cry foul, saying animals are not that hateful and violent; Others point out that some animals (e.g vultures, rodents and coyotes) are often as mean and nasty as Beck* Q: What is the difference between socialized debt load and socialized medicine? A: Catastrophic illness should not be equated with bad debts except for in those really, really rare cases where the illness causes financial insolvency* Dr. J suggests paying for Ford's steel to help them be more competitive; Through socialism we can all live on less and less until we can live on nothing; We all belong to everyone else* Spice in bed with swine flu; Meanwhile Greenpa spends his time pausing runway sex-slave videos; Disappointingly few redheads fall prey to this cruel trap* V is for Vendetta; D is for Dumpster; P is for Plutocracy* FED = Fox; Bank = Chicken coop; Safer coop is major goal of TAE; No chicken coop is safe from weasels; Best to distribute your chickens in several coops; The FDIC saves coops and weasels, not chickens; El G may start his own coop* I used to rule the coopDecide who would be chicken soupNow in the morning I scratch aloneIn the yard that I used to ownI used to peck at fliesSee the fear in the cockerel's eyesListen as the hen's would squawk"Now the old Cock is dead! Long live the Cock!"(Apologies to Coldplay)* Word for the day: CrappaholaPart of Speech: NounDefinition: ObviousAlternate Derivation: Onomatapeia for the sound effect in a deep-holed out housePersonified form: Crappaholic, e.g. Some crappaholics don't believe what I know to be true

The raid on the safety deposit boxes happened to quite a few people I know in England actually. The police open the box infront of you and video record the session. The contents can take as little as a week to be returned to as much as a few months, as long as it's legit.

WASHINGTON (AP) - The International Monetary Fund has approved the sale of a limited amount of its gold to help provide loans to poor countries and shore up its finances. The fund's executive board said it decided Friday to sell 403.3 metric tons in a way that does not disrupt the sale of gold in commodity markets.

I dislike the ad hominem attacks on Glenn Beck even though I don't like to watch him. Ad hominen attacks always say more about the person making them than they do about their target. Stoneleigh never makes them.

Even so I think Glenn Beck does conservatives a disfavor because he claims to speak for them but does it in such a disagreeable manner. I agree with a lot of the points he makes, but dislike the way he makes them. And I suspect he does them in a disagreeable way on purpose, i.e. for the ratings.

And, BTW, I wrote in Ron Paul for President. He is not perfect but is the best I've seen. He also never reverts to ad hominem attacks.

Sorry to hear about the H1N1 but glad you still feel good enough to insult right wingers :-) How severe are your symptoms?

I never watched Beck because in the VI I had the most basic service which didn't carry him, I watched almost no TV anyway, and my DSL was too slow for enjoyable video streaming. But I can relate to people saying that a particular celebrity gives them the total creep outs. Back in the 60's and 70's I knew plenty of people with identical political views to my own who I would not take my eyes off for a millisecond if they were in the same room with one of my kids.

Well the fever has been here for three days so far. (My doctor says it could last for 5. Yikes!)I have aches everywhere, a sore throat, sinus infection, coughing, wheezing, headache and the possible beginings of pneumonia.As long as I keep taking the antibiotics and keep the fever under control and the inflammation down I should be mending in a few days.Let's just say this is the worst flu I have ever had. I have quarantined myself away from Greenpa and Smidgeon for their protection.

"Thanks for the reply. I can appreciate that. I wish all liberals were more like you."

There's a good reason for that. Dark Matter just stated today that he considers himself a conservative. So to put it another way, Rodent, you wish that liberals didn't exist :-)

I wish that most conservatives were like Dark Matter. However, he said that he tried to watch Beck after this thread came up, and he found the persona of the man (not his ideology) so repulsive that he couldn't make it through the show. Do you approve of that as well or did it just slip your mind? Maybe this "persona" had something to do with relating him to unpleasant animals.

But for the record I don't consider myself a liberal or a progressive and I don't think I&S do either, unless you define a liberal as a human who occasionally feels a twinge of empathy for the suffering of a fellow human and might consider doing something about it. But then Dark Matter, a self-proclaimed conservative also shows symptoms of empathy, so I don't know what to think. As Vinnie Barbarino would say, "I'm so confused."

My apologies if this has been discussed before, but this is new to me. I haven't noticed this discussed in detail in any of the primers I've read so far, but have seen it mentioned in comments. I recently found the above-named hour long socieconomic/elliot wave presentation.

Towards the end of this, Prechter states that despite necessary setbacks, "the long term trend of human progress is upwards".

Do these patterns only apply to the last 300 to 400 years as European/Western society expanded without "limits". The graphs they showed appear to be covering only the past 300 years.

He does not appear to be aware of the concept of carrying capacity or overshoot, so how valid are these patterns now?

When they give examples of social mood declining in the 60's and 70's one could also fit these patterns into an energy availability pattern, with the rebound in the 80s and 90s corresponding to North Sea and Alaskan oil temporarily reducing the power of OPEC.

These patterns (Like the Charles Hugh Smith overlapping cycles mentioned last week) also appear to be somewhat "amerocentric". America was not the centre of the universe in the 1800s so I question using the civil war as a key reference point for historical cycles.

I would be curious to know if these fractal patterns were also observed in some form in more ancient civilizations, before what we recognize as "capitalism" of the past several hundred years.

(This socioconomics reminds me of some Isaac Asimov books I read years ago, the Foundation series I belive it was called?)

So to put it another way, Rodent, you wish that liberals didn't exist :-)

I only meant that he was being reasonable and not resorting to ad hominem attacks.

This started because Greenpa said he'd take seriously Glenn Beck if Glenn Beck actually took Republicans to task.

I pointed out one of a gabillion examples, and it degenerated into talking about animals instead of dealing with the fact that I just gave you guys a Republican that Glenn Beck bashes.

I wish that most conservatives were like Dark Matter.

My bad. I shouldn't have said, "I wish all liberals..." because the truth is that I wish everyone could have an intelligent, honest discourse as he was displaying.

Do you approve of that as well or did it just slip your mind?

I approve of someone saying that he hates the persona but agrees with the content. At least he tried to watch the show. Everyone else here is bashing Glenn Beck and you don't even realize that he is 90% on board with what this board is saying.

But you all can't HEAR that because you're too busy making animal jokes.

I feel somewhat appalled at the content of what you're saying about Glenn Beck because I watch his show every single day. I know what the guy is about, even if his personality grates. It's an acquired taste, I suppose you could say. I am talking about content.

Conversely, you all admit that you have never seen a show.

Maybe this "persona" had something to do with relating him to unpleasant animals.

Get back to the point. I handed you a Republican.

unless you define a liberal as a human who occasionally feels a twinge of empathy for the suffering of a fellow human and might consider doing something about it.

I give $30,000 - 50,000 a year in charity. On top of my taxes. Don't talk to me about empathy.

The empathy Dems like to give away is other people's money, not their own. By every measure, conservatives personally outgive liberals. Google it.

Empty gesture? How much of that 3 trillion dollar backup ever saw any action, anyone know?

If none, then it would seem to be mere PR or market boosting and no much else. The only cost I can see of continuing backing up MM's with idle electo-digits is moral hazard and there has not been too much concern paid in that department I think.

The only reason I have had a hard time with Beck is because he was one of the assholes who used to laugh at Ron Paul. Then, he co-opted alot of the fervor behind the Ron Paul Revolution, and used it to pump his show.

I don't think the average Joe the Plumber type of conservative understands Ron Paul. If they did, Obama would not be president.

I work with a lot of self proclaimed liberals (and like them) and find that we agree on the most important issues:

1) War is bad and usually only benefits large corporations2) As human beings we have an obligation to relieve suffering (we disagree on the state's role in this)3) People should be free to do what they want as long as it doesn't impact others (we disagree on what impact's others)4) Giving corporations personhood is a big mistake5) The Federal government is a wasteful behemoth, run largely by big corporations (we disagree on whether this can possibly be different)6) Local governments do a better job of delivering services

I can usually get them to agree that maybe the states, rather than the feds should work out the points we disagree on.

The basic problem with US health care isn't who pays for it, it's that health care is twice as expensive as anywhere else in the world.

Well let me take that back sort of. It does have to do with who pays for it. Because insurance pays for most all of it leave it to Americans to find every way possible to take every possible advantage of the middleman, the insurance company. Customers and providers all in for everything they can get. And then in a demonstration of the true genius of America the insurance companies playing both sides against each other and coming out the biggest winner of all.

The sad fact is that Americans are the worlds greatest knivers. It's sort of amazing we have been successful as long as we have.

Ron Paul was able to unite Ralph Nader, Cynthia McKinney, Bob Barr, and Chuck Baldwin in agreement on four principles:

Foreign Policy: The Iraq War must end as quickly as possible with removal of all our soldiers from the region. We must initiate the return of our soldiers from around the world, including Korea, Japan, Europe and the entire Middle East. We must cease the war propaganda, threats of a blockade and plans for attacks on Iran, nor should we re-ignite the cold war with Russia over Georgia. We must be willing to talk to all countries and offer friendship and trade and travel to all who are willing. We must take off the table the threat of a nuclear first strike against all nations.

Privacy: We must protect the privacy and civil liberties of all persons under US jurisdiction. We must repeal or radically change the Patriot Act, the Military Commissions Act, and the FISA legislation. We must reject the notion and practice of torture, eliminations of habeas corpus, secret tribunals, and secret prisons. We must deny immunity for corporations that spy willingly on the people for the benefit of the government. We must reject the unitary presidency, the illegal use of signing statements and excessive use of executive orders.

The National Debt: We believe that there should be no increase in the national debt. The burden of debt placed on the next generation is unjust and already threatening our economy and the value of our dollar. We must pay our bills as we go along and not unfairly place this burden on a future generation.

The Federal Reserve: We seek a thorough investigation, evaluation and audit of the Federal Reserve System and its cozy relationships with the banking, corporate, and other financial institutions. The arbitrary power to create money and credit out of thin air behind closed doors for the benefit of commercial interests must be ended. There should be no taxpayer bailouts of corporations and no corporate subsidies. Corporations should be aggressively prosecuted for their crimes and frauds.

In real life, I shop at Goodwill, live simply, and give in secret. Nobody has any freaking clue that I'm almost a millionaire and give away 30% of my annual income. People still give hand-me-downs to my kids and offer leftovers from church picnics.

And it's relevant to the discussion, since someone implied that I had no empathy since I'm a conservative.

But I guess we've got to resort to calling me names instead of conceding the point. This is getting tiring.

Leave Rodent alone, he is my good buddy who is upholding all the ideals we Americans hold so dear: thrift, enterprise, and self-centred low cunning, so don't queer the good thing we got going and get outta here before I throw my begging bowl and family crested silver spoon at you.

Leave Rodent alone, he is my good buddy who is upholding all the ideals we Americans hold so dear: thrift, enterprise, and self-centred low cunning, so don't queer the good thing we got going and get outta here before I throw my begging bowl and family crested silver spoon at you.

"And it's relevant to the discussion, since someone implied that I had no empathy since I'm a conservative."

That was I. And your statement, as many of your statements, was inaccurate. I was pointing out that dark matter considered himself a conservative but showed empathy, so this was not a valid criterion of liberal vs conservative.

Greenpa is one individual, yet you use him to define the "whole liberal TAE." As too whether Beck bad mouths a Repug other than W, I don't give a rat's ass, if you will pardon the expression. As Gore Vidal put it, "We have one party with two right wings." If I ever had any feeling of connection with the Democratic Party, the fiscal crisis has shattered them. I have listened to Hannity and Limbaugher, and find them to represent everything vicious and hypocritical. I don't know Beck.

I stated that I never watched a Glen Beck show, and made no personal criticism of him. I just pointed out that a fellow conservative on this site who you like and respect, can't stand his vibes either to the point that he can't sit through an entire show.

I have fast enough DSl that I could stream him now, but I have better fish to fry. I'll take dark matters word that he would make me nauseous.

Re The Automatic Ron Paul

I agree with every statement made here. Does that make me a Libertarian? Labels are dangerous. I disagree with Paul about abortion and feel he is subverting his Libertarian values on that one.

Are you high? Thirteen million ounces is, obviously, about $13 billion—probably closer to $12 or even $11 billion by the end of the sale. No matter how orderly the sale, gold prices will take a huge hit....

....and I'm guessing that that is exactly the point: The IMF (in conjunction with the Fed/Treasury?) probably would like to see an orderly devaluation of the dollar. Selling a big chunk of gold—and making a fuss about it—would be the ideal way to go about it: Sell gold big, watch gold prices fall hard while simultaneously killing the dollar. When gold finally rebounds to realistic levels ($2,000 an ounce? $2500?), everyone will be used to the demi-dollar.

Myriad! The fact you are still posting (with aplomb, I might add) throws in bas relief the triumph of expectation over experience. The nummber of missed predictions here at TAE dwarfs the scant number of hits to a level of utterly inconsolate fervor backed by a near unfathomable level of narcissistic indulgence.

Both I&S ought dye theirr hair back to S's ancient royal purple until the moment their predictions ring at least hollowly true. A week, I would say, at the minimum ought to do. If that bellweather is breached then you are both welcome to resume your drab colour and predictions as you will.

WASHINGTON (Reuters) - The United States and Europe face a new health threat from a mosquito-borne disease far more unpleasant than the West Nile virus that swept into North America a decade ago, a U.S. expert said on Friday.

Chikungunya virus has spread beyond Africa since 2005, causing outbreaks and scores of fatalities in India and the French island of Reunion. It also has been detected in Italy, where it has begun to spread locally, as well as France.

"We're very worried," Dr. James Diaz of the Louisiana University Health Sciences Center told a meeting on airlines, airports and disease transmission sponsored by the independent U.S. National Research Council.

"Unlike West Nile virus, where nine out of 10 people are going to be totally asymptomatic, or may have a mild headache or a stiff neck, if you get Chikungunya you're going to be sick," he said.

"The disease can be fatal. It's a serious disease," Diaz added. "There is no vaccine."http://www.reuters.com/article/healthNews/idUSTRE58H60320090918?feedType=RSS&feedName=healthNews&rpc=22&sp=true

When mother earth gets done spiting the human race out it's probably going to burp and say, man that tasted like shit.

Ha! Rodent donates 30% of his income and is attacked for being a show-off by people who likely don't. Typical liberals.

Today's thread is a great microcosm of our political system. The liberals are trying to figure out a way to pick the pockets of the harder-working conservatives so as to line their own. The conservatives are resisting the effort. And Wall Street and the government pick everyone's pockets during the distraction.

P.S. Ilargi--Beck's a blend of populist and Libertarian; he's not a Republican.

I agree with every statement made here. Does that make me a Libertarian? Labels are dangerous. I disagree with Paul about abortion and feel he is subverting his Libertarian values on that one.

Ron Paul delivers babies. One of his earliest residency experiences was watching the doctor remove a fetus and toss it into the garbage while it was still 'alive'. That scarred him for life. He is not against anyone getting abortions. He just thinks, like most things, that it should be decided at the state level. His stance is if you want to have an abortion, you should be able to have one, as long as your state says it is legal.

He believes in the US Constitution and the powers that it grants to both the federal government and the states. He does not think that the federal government should have more power to decide things than was allowed in the Constitution- and that includes abortion.

You are, IMO, reflecting on the differing values of different nations. Why not consider a move to a place where the culture is more in line with your own values? Obviously, the US doesn't represent these (and I'm not being facetious or scornful here--it is my conclusion after observing the differences in culture among nations).

Changing the culture of a nation, state, or region seems much more difficult than moving somewhere else, at least in the near future.

TAE Right Winger,RE: Today's thread is a great microcosm of our political system.

I couldn't agree more. Lots of people on both sides of the isle talking past each other, calling names, digressing into petty arguments over who said what.

It's one of the principle reasons this country is failing!

When arguments on the national stage generate more heat than light and the populace becomes so polarized that it is unable to find common ground, it becomes unable to address problems that are obvious to all. Things like campaign finance reform and corruption go unchecked.

The financial giants rake in billions from the government coffers in plain sight as a direct result of the mess they created and we are arguing over rodent's 30k.

Ha! Rodent donates 30% of his income and is attacked for being a show-off by people who likely don't. Typical liberals.

This is unfair and unkind but not untrue. Conservatives give more of their income to charity than liberals. Liberals are more willing to raise taxes to support charitable causes. The initial intention and end results are very similar only the method is different.

The liberals are trying to figure out a way to pick the pockets of the harder-working conservatives so as to line their own. The conservatives are resisting the effort. And Wall Street and the government pick everyone's pockets during the distraction.

Liberals do want to raise taxes to pay for programs that conservatives oppose, but to categorize this as picking your pocket to line theirs is disingenuous and derisive.

Taking a factually accurate situation and framing it in an unkind and unfair way is the reason liberals get their panties all in a bunch over the likes of Beck and Co. You're better than that TAE Right Winger.

If you're not, then you best shape up soon because, as you noted, Wall Street and Co. are making off with our money in the life boats while we squabble over the deck chairs.

We are all to blame in this, and we had better shape up soon or this country is going to crater. Even if I&S are totally wrong and the economy comes up smelling like a rose we are going to crater because a society that is unwilling to compromise and unable to solve obvious problems is doomed.

I should add for completeness that saying demeaning and derisive things about Beck and Co. is equally counterproductive.

Saying that one doesn't like his ideas or the way he expresses them is fine. Relating him to animals with no brain or that eat their young is uncalled for. Being ruthless and petty in the ridicule of a person over how ruthless and petty they are doesn't help at all.

From the FDIC web site-----------------------------------------Does the FDIC insure safe deposit boxes if a bank fails?The FDIC does not insure safe deposit boxes or their contents. In the event of a bank failure, the FDIC in most cases arranges for an acquiring bank to take over the failed bank's offices, including locations with safe deposit boxes. If no acquirer is found, boxholders would be sent instructions for removing the contents of their boxes.Robert W

I hate to interrupt this flame fest, but I came across a juicy nugget of information about the Bank failures this Friday. Most of the MSM reports are shallow and incomplete, as we're talking about small potatoes here.

It seems like Irwin Financial was trying desperately to receive TARP funds, but (believe it or not) the Treasury does have some standards.

"Intended or not, the Treasury identified who it sees as the long-term winners with Tarp. If you applied and didn't get it, you are not viewed as a long-term survivor,".

If you're associated with FBOP Corp in Oak Park, Ill., you might want to read the article.

There are several things to take away from this. Most immediate, if you're looking for a new bank, is to enquire as to whether the Bank has applied for TARP funds.

If they have, but didn't receive any, then they may be like Irwin and in serious trouble.

I would definately NOT view having received TARP funding as a green flag. I know of several Banks that have received TARP which I wouldn't touch.

But this explains something which has been puzzling me. I've seen some otherwise good banks which have received TARP.

These banks are subsidiaries of Irwin Financial Corp (IFC NYSE). Note IFC's stock price this week; it tanked on Wednesday. Think there was some insider trading going on?

Here are the TAR numbers on both of the Irwin banks:

Irwin Union Bank:TAR June 2009: 75.0TAR June 2008: 32.0

Irwin Union Bank and Trust:TAR June 2009: 70.6TAR June 2008: 59.8

The National media has risen in three months from 11 to 13.

Look at the rise from 32 to 75 in one year. This is typical (actually on the low side) and is of concern because some supposedly safe banks are around 30 now. In particular, BofA just moved in the high 20's in June.

I read today's comment threads and I want to scream. I really don't care what anyone thinks of Glen Beck. We now have allowed a lot of time and energy to be wasted on this topic. Just to be clear and state my "bias" - I do not watch Fox News because I do not believe it is "news." I do not watch Glen Beck and I will not any time soon.

This whole strain is part of the problem. We have people who try to divide themselves into to camps - pro and anti-Glen Beck. This is so stupid and pointless. Do you all not understand this?

You are all arguing to so as to force the other side to admit that you are "right (as in correct.)" I can't convince conservatives that I am "right" and they'll never convince me that I am "wrong." That is why these types of arguments are so useless. But nevertheless, there actually are a number of things we all agree on, or why do we all continue to come back to TAE?

So, I will reiterate that what I am hoping for is a different type of discussion, one that all sides seem to have gotten out of the habit of having. We need to interact with each other as if we do not assume that someone who disagrees with us is inhuman, immoral, or incompetent.

I have grave fears about the implications for the types of solutions that libertarians advocate and I do not think that they are unfounded. I think libertarians fail to acknowledge certain things: 1. not all people play by the rules libertarians do (I just finished a book about China that was quite eye opening and for example explained why the concept of "economies of scale' is irrelevant in China) 2. that libertarianism is subject to being exploited by those who will claim to advance libertarianism while in reality pursuing their own objectives (I think Lee Atwater was a master a telling libertarians what they wanted to hear in such a way that he never actually had to deliver and I think Glen Beck is a strain of the Atwater method) 3. the libertarians that I know were "conservative" until W. Bush did something they didn't like and then all of a sudden dashed out to reclaim their "libertarian" roots and so I am skeptical of anyone who claims there are actually "libertarian principles" because I don't think they know what they are 4. libertarians quote all kinds of crap about state's rights until a state follows legitimate procedures to enact something they disagree with - then the get offended and say that the federal government has to take it over because the feeble minded "liberal" state cannot make decisions for itself and 5. I think many people hear at TAE are hugely skeptical that local government can actually provide quality services at reasonable cost because local government is the MOST likely to be corrupt because it is the EASIEST to control (all I have to do is be a protestant living in Catholic Chicago to understand that I don't have a snowball's chance in hell against the Catholic (some would say Daley) but make no mistake it is a Catholic political machine in Chicago (and in a large part of Illinois) lastly, I believe that the positions advocated by libertarians are the fastest way to a corporate hell populated by all kinds of "privatized" entities that due to corruption and lack of competition will be the true "authoritarian" threat to American democracy as they will gain control of all aspects of American life and leave all Americans without any kind of legal and/or procedural protections, and this will result in a world in which you will never know precisely who is responsible for your present circumstances.

So, I will state unequivocally, I am not and will not ever be a libertarian. I understand that there are risks that come with a more left leaning point of view. I have thought this through throughout my life and I have come to the conclusion that I will embrace the risks of the left more than I do the risks that come with the ideology of the right.

I came to TAE because of what I went through. I have experienced the things that TAE discusses. I appreciate I&S because I think they have given me great advice and have helped me understand why I ended up where I am after I "followed all the rules." I think a great deal of what is being discussed here may some people by just because they haven't experienced it yet.

I am learning that I have "conservative" parents. I don't think that they understand yet that their pensions are gone and they just don't know it yet. The tragedy that I see in the future is that they won't understand that their money was gone long before Obama became President. Once they have to deal with the reality that all the things they were told to count on are gone, I do think they will join the "libertarian" chorus of those who want to convince American's that what Obama really wants is to enslave all white people. My dad said that as a "joke" after his election, but I think that's precisely what all the noise boils down to. Obama hasn't enslaved white people. If you really listen to what I&S have to say, the overarching truth is that we have all slowly but steadily allowed ourselves to become convinced to enslave ourselves to ambiguous and ubiquitous corporate entities. I just don't think Libertarians have the stomach to admit that they are just as responsible for our predicament as anyone else.

There was a joke in the 80's that a republican was a democrat who got mugged. Maybe the 2000 version will be that a democrat is a Libertarian who realized that republican's convinced him to allow the government to steal his home, his money, and his future initially with his consent.

I'm going to tell you what you don't want to hear, and that's why I'm no longer allowed to post at your site:

IT IS OVER THE MOMENT YOU DO. EVERYTHING.

Your only real option left, Mr. Denninger, is to call a shooting war against those who are that corrupt (which is basically the entire government) AND the population reliant on them (which many of your posters so eloquently refer to us as "leechfucks").

Shooting war. Civil War II, if you must.

Understand: If what you are saying is right (and I have little reason to believe you aren't here, with this ACORN bullshit), is anyone particularly surprised that there would be people within the halls of power in this country who would openly aid in the child sex slavery of Central American children?

I would be utterly SHOCKED, bluntly, if the better part of the US government didn't have hands (and much more) in child sex trade. Pedophilia is one of the last bastions, as has clearly been identified, of dying empires. Not just that pedophile that hangs around the park, waiting for school to get out -- I'm talking the highest powers in the land.

Why? BECAUSE THEY CAN, Mr. Denninger. And there's nothing you can do to stop them...

Where are the cops on this corruption? On the take, or knowing they are dead the moment they try to do anything about it.

Why? The country is FINISHED the moment the truth comes out. This is why Lyndon LaRouche has said (under what I believe the false premise that, on the new fiscal year (10/01/09) that the government has to tell the truth about it's current position) that the whole world economy has only 2-3 weeks left.

Why stop lying now? The entire world's civilization now depends on that lying.

As I said before: You audit the Fed, you lose the US Dollar, for it has nothing to be a Note of at that point. The Fed fails.

You go after the crooks, you have maybe a handful of Representatives and MAYBE a Senator or two. That's it.

You would have no government, no currency, no economy, no social order -- you lose everything.

The populace of the United States are NOT citizens. They are nothing short of consumers, and the 70% of the GDP which IS consumption of buying things in the economy proves this out.

We live at the pleasure of that same corrupt government you rail about. The moment that pleasure stops, things get FUGLY.

"... with a sacred duty to uphold a document..."

THAT IS DEAD, MR. DENNINGER. The Constitution of the United States of America was done away with at some point -- you can put it at JFK, RFK, MLK, Nixon/Watergate, Reagan, either Bush, Clinton, Obama, 9/11, whatever...

But that document is DEAD.

Oh, "the good and decent people of this nation"... How many of those are there?

50 million?

20 million?

5 million??

I think you better get a good idea of what you're up against, Karl. They don't care unless they have theirs. That goes for Congress and most of the populace too.

The only way you stop this is with violence. Nothing more nor less, Karl. The moment you get that through your skull, the moment you'll understand.

@ Nassim, re the Ft article about small investors returning to the market...FT does not comment on events so I really appreciated your surmise that the last of the bears are jumping into the market.That insight is significant.

@board...the emotional, heart felt thread this evening of Beck,left,right,libertarian etc. is an ideological battle ground. We have not a problem but a predicament here, one that ideology is ill equipped to steer us through. Personally it is very hard to let go of my ideology( I love ideas ).IMO it is not useful now to be arguing over which label will have dominant market share. Yes, good governance is important. Does anyone on this board truly think an election of one's favored ideology will clear the predictament/impasse? I declare that I don't.So what now,eh?

@Starcade, greetings! I've been pondering folks back in " the dirty thirties" just wandering, scratching for work,for food,for shelter.SHOELESS! There was no blood running in the streets. Why do you think the response will be violent mayhem this time? Is it perhaps that now we have a sense of entitlement that didn't exist in the '30's? What condition do you see as the fuse?

Propaganda works not by telling people what to think but rather by telling them what to think about. Also by extension what not to think about. Thus today it's the absurd ACORN story, health care, the 18 year long kidnapping and the murder at Yale.

As far as the "numbers", they are all good and improving. Just look at the stock market. FNM has gone from 60 cents to 6 bucks. Never mind that the Treasury owns 80% of it and will be giving it XX billion per quarter for years to come to make good on it's obligations. Those being the guarantees on the mortgage securities returns of millions of mortgage payments that will never be made.

Never mind that. We've got the latest and greatest Howard Beale. With a view of American history filtered through an oddball religion which is a heresy of the nations dominant one that is the American equivalent of Rastafarinanism. As interpreted by a dry drunk drama queen with issues. Who is profiled this week in a news magazine in a obvious attempt to get people to choose it over Soap Opera Digest at the checkout lane. Both filled with true stories about make believe.

The hunt is on. The technique goes back in America at least 8000 years. Find a cliff at the end of a canyon, and then stampede the buffalo down the canyon. In the current hunt, the walls of the canyon are incredibly low interest on savings and falling real estate. Where is a right minded buffalo to go? Afterward GS and JPM will bring their flint implements to the base of the cliff and dismember our friends and relatives.

David

Do you really believe that the PPT and the oligarchs are different constituencies with different objectives? If so, please make a detailed case for this.

The Automatic Ron Paul

Yeah, if I am going to be tortured, I would much rather that it be done by a state rather than the federal government. It would make me feel **so** much better about it.

Linda S.

Nice to hear from you after a long silence. I believe that the Republican and Democratic parties are controlled by the right and left hands of the bankers respectively. When Obama appointed Geithner and Summers, it was a Q.E.D. moment.

i agree with most of what team10 posted. but i find it weird after following the thread or flame war yesterday that he chose to hilight the two animals offered by the super liberal, green married couple on the board, not the weasels and sea squirts. why?

They weren't the best examples, just the ones that I remembered off hand when writing. Greenpa and Spice are very reasonable and responsible people. They weren't trying to be mean, they were trying to be clever and someone else perceived it as being mean.

Same is true with TAE Right Winger. He's a reasonable guy and he's certainly not the worst offender, he was just the last person to post when decided to speak up.

My intent wasn't to single anyone out but making a good case requires examples.

My high school history teacher told me a story about her parents in the Nixon vs Kennedy election. Her parents were Kennedy supporters and and they were friends with a nice couple down the road who were Nixon supporters. Things got very heated in the run up to the election and the two couples made a pact not talk about it after the election.

Well, one of them let some gloating comment slip a few days after the election and they didn't speak to each other for just over 20 years.

Needless to say the level of community dropped on their block. And I feel that a sense of community is a prerequisite for a viable democracy.

Poking fun at people's cherished beliefs is dangerous. It's one of those things that is easy to avoid but hard to repair.

We have to talk about policies that hit nerves, it's unavoidable in the highly polarized world we live in. If we want any substance out of those talks we need to be nice, polite, and considerate in order to find common some ground that allows progress to be made.

The alternative is shouting matches and impasses. I know that it is very satisfying and occasionally hilarious to call someone a big fat idiot, but it is rarely productive.

I heard an "economist" speaking on NPR a couple days ago (he sneaked up on me) and he pulled this line:

"Look, we're all to blame. Nobody held a gun to anyone's head to make them take out a mortgage."

It sounds like one of those "hard to hear but true" things; but it's actually just an exculpatory ploy from the bad guys.

My Aunt Martha is not to blame for her mortgage.

She's a plain old harmless person; living in a smallish town, and she relies on advice from professional financial advisers, both in the bank and elsewhere. (And yes, fictional; but we all know an Aunt Martha; I know many.)

She thought, and believed, she could trust them. In fact she fought facing the truth that they either didn't know what they were doing, or didn't care, or were actually playing her for a sap and taking fees for their useless advice.

The entire "financial sector" of the economy was pushing very hard in these wrong directions. They make a big herd. Most of us krill were just hanging there in the water, and suddenly this big school of educated, fat, respectable krill stampedes into us- and soon the whole merged school is moving- in a bad direction. Right into the blue whale's mouth.

So- while indeed "everyone" should shoulder some of the blame- there were also people who knew what they were doing, and kept pushing the school into the whale's mouth.

I listen to NPR's All Things Considered on most days. I enjoy their so-called economists, mainly the Planet Money team. When I was young I would like to watch Art Linkletter's show, Kids Say The Darndest Things, and I haven't found a suitable replacement until NPR's Planet Money team and Steve Inskeep came on line.

BTW, anyone here who thinks that you and Spice represent the "far left" of this site is delusional.

team10tim

I agree that the so-called social issues are being used by the banksters and oligarchs to separate both left and right krill from their assets. I couldn't vote for president in the last election. My social network was way left of center. Despite none of us being able to vote, the election was a central point of discussion. I remarked that I couldn't vote for Obama anyway because he was obviously in bed with the banksters who were financing his election. I said that if I could vote, I would vote for Nader once again. They were shocked. They said what about the "social issues." I said that the impoverishment of the middle class is **the** social issue.

Greenpa - While I certainly agree that the banking system and Wall St. shenanigans are to blame for much of our predicament I am a little reluctant to say that a lot of the folks who over indulged in debt are having to reap what was sown.

That does not mean I am unwilling to help straighten things out in constructive ways. I am quite willing to do that because I really think this situation evolved among the average citizenry without evil intentions.

But around here it is not Aunt Martha who got herself in trouble, it was/is more just younger folks who were not thinking about the possibilities and wanted more, sooner, than was within their means.

The basic reason though... agreed... is the corrupt lending structure, etc. from the top down.

Sample ...“The reason most of you here are thoroughly ****ed off at the moment is because you see your personal wealth being destroyed along with your means of making a living trading on the market. How many readers have I read here who make the statement NOW, "I am out of the Market, its a Casino". Its ALWAYS been a rigged game, just before the graphs started going assymptotic a good Card Counter could make money at the game, and it was legal. Now NOBODY except The House, AKA Goldman can make any money this way.”

Thank you for sharing your "conclusion." My husband and I have thought along similar lines -- Canada, Ecuador, Costa Rica? ... It is very difficult for us to move abroad, though, because we have not traveled much, have limited financial resources, and would like to keep our family "together." Also, at times I'm skeptical about the grass being greener in another country. It seems like every location has pros and cons when one takes into account climate change, economic collapse, peak everything, etc. Fortunately, we are still flexible since we haven't purchased land in Vermont yet.

The entire "financial sector" of the economy was pushing very hard in these wrong directions... They deserve quite a lot more blame.

Agreed, everyone on this blog realizes the role the financial sector played in making this mess and that's what we should be talking about. Financial sector vs the people clearly doesn't fall under the heading of 'we are all to blame' but that's not what I was referring to when I said it.

How did the financial sector get away with pushing those changes through? The financial sector is arguably more influential in our democracy than the people said democracy is intended to represent. Who's to blame for that? How did we let this happen?

Who's to blame for letting the MSM consolidate and degenerate to the nearly mindless low quality infotainment that passes for journalism today?

Who's to blame for the demise of communities and creation of giant sprawling neighborhoods where no one has any family or knows their neighbors?

Who's to blame for corporations usurping our democracy?

Before you answer, I acknowledge that there are systemic drivers beyond our control, but that is always the case. How did we let these drivers take the reins from our hands? I know that there was no golden age where democracy worked perfectly, but it is certainly working less well today than it did 50 years ago.

We are all to blame for letting that happen. If there is to be any hope for the future we need to reverse that trend and bridging the partisan divide to work on problems obvious to both sides is one of the ways forward. We are all to blame for letting that divide become a chasm that we have to shout across and we are all responsible filling that chasm in one rock at a time.

Although I agree with much of what Linda writes about Libertarians--political Will O’ the Wisps who will turn on a philosophical dime in order to remain true to their base GOP instincts--I do think it is useful to do close readings of folks like Glenn Beck or even a Lyndon LaRouche( did Starcade just elevate the musings of LaRouche?). As Bertolt Brecht pointed after analyzing the 1934 speeches of Goering and Rudolf Hess, lies and rhetoric were concealed with a ‘mellifuous continuity of language functioning like a robust gooey adhesive.”

When reading or listening to the likes of a Beck, or anyone else for that matter, it strikes me as a good idea to pay just as much attention to HOW something is said or written as to the actual narrative content.( Not that the politicians have not become ever more slick and concealed regarding actual intention.) In doing so, one might come to realize that the form of the speech reveals quite a bit more than the actual words spoken. But a closer scrutiny of the spirit that animates some of the more militant types is typically undermined by the sheer vehemnece of the delivery. Most people are content to leave Beck and his smallish group of rabid followers on the outer edge of societies periphery much in the same way they avoid their local city dump. Which is what Linda seems to be advocating.

Below is a link of Gina Loring’s “You Move Me.” An awesome display of form embodying meaning--the slow tempo shaping reflection and the fast tempo tumult and angst--as a litany of celebrity names roll off the end of her mercurial tongue in dazzling displays of verbal agility:

Coy Ote said...El G - "... I couldn't vote for Obama anyway because he was obviously in bed with the banksters who were financing his election."

This may be a simple matter of looking into his contributors, etc. but... anyway...

How did you know this?__________________________

Didn't even have to do this check. It was widely reported, even in the MSM, that Wall Street was contributing to the Obama campaign in a much higher ratio than to McInsane. Part of their "liberal, New Yawka bias :-) These people know something about marketing. Installing Slick Barry will turn out to be far more effective in the short run for them than McInsane.

My closest friends live in Northern Sask and I do occasionally visit them (though usually they would visit me in the Caribbean, coincidentally round about January :-)

The first thing that I thought of reading this article is what is the ratio of Native Americans in this poverty study compared to the remainder of the Canadian population? Couldn't believe that they left out that demographic considering it went into other demographics.

At least they should suffer no protein shortage considering the abundance of pike, deer, moose, elk, and buffalo.

el gallinazo said...At least they should suffer no protein shortage considering the abundance of pike, deer, moose, elk, and buffalo.---- Sorry to inform you ... there is no abundance ...in the upcoming crash ... there is a greater abundance of rats which would be easier to obtain.

". . . the following facts about Denmark:Denmark has the rich world's (OECD-18) second-highest total taxation burden at 48.8% of GDP (USA at #17 at 29.6%).It probably has the highest environmental and energy taxes of any country.There are taxes on drinking water and the disposal of waste water.Every company pays waste disposal charges and households are charged for garbage collection.Packaging is taxed.Danes pay 25% VAT (Value-Added Tax) on all goods and services....and yet...Forbes magazine - you know, the Capitalist Tool - just rated Denmark as the #1 country in the world for business. For the second year in a row.Economist magazine just did the same and added that this is to be so for another five years.Danes are #1 in life satisfaction (USA #11).Since 1980 Danish GDP has grown 70% while total energy consumption has remained flat.Obviously, low taxes don't make for an enviable economy and it follows that lowering taxes does not make for infallible public policy, as Bush II and his incompetent gang proclaimed."

We're taking signs of recovery on faithThere are scant statistical data to back up growing optimism about economic improvementHarvey Enchin, Vancouver SunPublished: Saturday, September 19, 2009

Today, we launch a new weekend feature titled: The Economy Understood. Editorial board member and columnist Harvey Enchin -- with more than 30 years experience in business/economics reporting -- will make sense of the stream of economic data that pours out of government agencies, banks and think-tanks every week.

Specifically, Enchin will give you a sense of where the economy is headed, the direction of interest rates, housing prices, budget deficits and the jobs picture, among others. He will put the numbers in the larger context and tell you how to intelligently read the seemingly contradictory headlines such as "the recession is over" and "job losses continue."I am sure you will feel enlightened after reading Enchin's explanatory columns every Saturday.----- I will be following this main stream media to see if he will explain the “truth”.jal

Methings that many who consider themselves "caring" or "human" are about as progressive and liberal as those who more proudly (and accurately) call themselves such.

Not many of us conservatives where happy with Bush, as he's a penultimate neocon. Paul comes closer, and I don't see how one can claim that libertarians are fickle.

All I'm asking, really, is that gov't spend only what they take in, and the parties argue out what to spend the money on, rather than agreeing to incur debt and try to do everything.

We can call Social Security "retirement savings" and Medicaire "insurance", but they're both entitled welfare programs with some window-dressing to make them somehow seem "individualized".

Let's just be clear about what the goals really are, put them in some sort of priority order, and go down the list until we run out of money. Then -- here's the really crazy part -- let's stop spending.

Auto Ron Paul - As previously posted, I like most of Ron Paul's platform, but on health care I am befuzzled.

I do not believe that Ron Paul does accepts Medicare or Medicaid or insurance in his practice. I know there was a movement in Texas around that sort of thing. There is also a sort of coop group that started here in the NW that follows a similar path.

By not accepting Medicare, Medicaid, or insurance, costs are way down. You walk into some places and there is a a sort of menu with prices- Checkup $10, Hang Nail $3, Stiches $20, etc. People pay with cash, and if they do not have cash they get on a payment plan, and if they still can't afford it, I think that some services are free.

Doctors still make a good bit of money. Recently there was a doctor in New York state that tried to do the same thing and he was taken to court, fined etc.

Ultimately, the entitlement system has to end. Yes, people are dependent on it. But these people need to be helped to decrease their dependency. This could be done by bringing back our troops and spending money to transition to a system of fairness and reality. Think of it in the same way that we are dependent on foreign sources of oil. Eventually that has to end.

It does not mean we turn our backs on those who are dependent. It just means that we change the goal from being dependent on a large central government to being more dependent on ourselves and our local bio-regions. We transition slowly to a less complex, less energy intensive, less consuming lifestyle. One way or another, we are going there, like it or not. We might as well be realistic about in the meantime.

There needs to be some voice, somewhere, telling Aunt Martha that it's really not her fault all her savings have vanished.

Aunt Martha could do a lot worse than to watch the Daily Show with Jon Stewart on Comedy Central. Of course she will need a satellite dish or a good cable company.

I think it was not undeserved that right after Walter Cronkite's passing the self-admitted fake newsman was voted in a nationwide poll as "The Most Trusted Newsman in America". Jon made Jim Cramer whimper and crawl like a baby. He had some success in exposing Betsy McCaughey for the predacious poltroon she really is. When he wants to warn us about the dangers of Empire, he drags out John Oliver to let us in on what the Brits learned.

I like your metaphor. The Great Amoeba of Man - actually does not have a brain. It relies on DNA rules for how to behave. Pre-existing stuff from past generations- culture.

The Great Amoeba is vast, almost beyond the comprehension of its individual bits. Steering it; controlling it-

Very very very difficult.

I think that is a very accurate description of our present situation. So, what to do about it?

One of those rogue RNAs is the corporation, it has become cancerous. It is a systemic driver pushing us in a direction we don't want to go.

To fix this we need to replace corporations with something that drives us in a direction we do want to go. The little piece of DNA that I'm working on is the worker owned business. It has different performance characteristics than the corporation. It's unlikely to pack up shop and move to China or dump toxic waste in the commons. The trick is going to be getting worker owned businesses to out compete corporations and gain market share. That's the piece I'm working on.

There are lots of other pieces to work on. None of them are going to police the rest of the amoeba, but each of them can help to coerce it in a more favorable direction.

Of course, no country is perfect. I believe that, for many reasons, some countries are more perfect than others, and especially so when one contemplates future events. I prefer to look at a country's "character" as it is reflected in its actions or artifacts it produces (see, for example, the light rail and other public transportation elements of Portland, OR, compared to the six story highway interchanges where I live). Decent health care is going to be a must in the coming years, if it is available at all. The US cannot produce an equitable health care system in good times, and there is nothing which leads me to believe that a different result will obtain in the current economic environment. If this were the only reason, I might have more hesitation, but of course there is much more about the US that is extremely troubling. You are aware of these aspects already, I'm sure.

Do you really believe that the PPT and the oligarchs are different constituencies with different objectives?

Of course they are different, because they have different objectives entirely.

The PLUNGE Protection Team is just that -- a group of GOVERNMENT appointees charged with preventing a disastrous plummet off the cliff by the stock market. This would destroy consumer confidence, focusing rage on the administration, and would make their political agendas extremely difficult to implement.

The oligarchs, on the other hand, care not one whit about the perceptions and needs of the general public. When they have achieved the optimal market level they will short it, and crash it, and drive it into the ground if they can to absolutely maximize their profits. They give as much a damn about any government political agendas as they do about the life savings of the millions they will destroy.

Mad Max Keiser this week on his On The Edge almost has a meltdown as as he fungos trashballs in a rage. He interviews Aussie economist Steve Keen, one of a handful of economists who quite literally are worth their salt. No Faux Nobel for Steve. Keen states that the world would be a far better place if all economists, including himself, were exterminated. When he gets down to brass tacks, it sounds like I&S with an Aussie accent. One minor negative, they video Skyped Keen and the audio could be better.

Conservative, right wing, liberal, Democrat, Republican – who gives a toss? Seriously. Not only are the arguments and personal attacks about as boring to observe as slow drying paint, but its also painful to realise people think it matters.

Government bows to its corporate masters – politics in its current form is a game that makes you think you have some modicum of power over the running of your country, and to split the people's energy – divide and conquer. Time to wake up.

"Myriad! The fact you are still posting (with aplomb, I might add) throws in bas relief the triumph of expectation over experience. The nummber of missed predictions here at TAE dwarfs the scant number of hits to a level of utterly inconsolate fervor backed by a near unfathomable level of narcissistic indulgence."